Why Shares in This Under-the-Radar Data Center Stock Power Surged 16% Today
Key Points
Investors were positively surprised by Advanced Energy Industries' latest update.
The stock is a genuine play on increased data center spending led by massive AI-application demand.
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Shares in Advanced Energy Industries (NASDAQ: AEIS) powered higher by more than 16% as of 12:45 a.m. today. The move comes after a well-received fourth-quarter earnings report that saw the company beat its own expectations, expand margins despite the disruption of the closure of its last factory in China, and report strong growth in key end markets.
Advanced Energy Industries earnings: Data center-led growth
The company makes precision power equipment that converts raw electrical power into highly precise, consistent, and reliable power for critical applications such as keeping semiconductor production going or a data center running. Those two markets accounted for almost 80% of its revenue in the fourth quarter.
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It won't surprise readers to know that its data center solutions boomed in 2025. Even though they only grew 4% quarter over quarter (QoQ), they increased 101% year over year (YoY), driven by ongoing data center investment to support massive AI application-led demand.
However, the real surprise story comes from the 8% QoQ growth in semiconductor solutions, which marks improving momentum as YoY revenue was down 7%.
CEO Steve Kelley sounded bullish, arguing that its data center customer wins in 2025 "are going into volume production this year," and that the company continues to develop technology relevant to the next generation of data centers (800V HDC data centers) due to launch in 2027. According to Kelley on the earnings call, "based on our analysis of the market, our total dollar opportunity goes up with 800-volt solutions relative to what we're generating today," and he expects data center revenue to grow by more than 30% in 2026.
Image source: Getty Images.
Semiconductors are also a growth area
Management didn't give 2026 growth guidance for semiconductor solutions, but Kelley noted that fourth-quarter momentum carried through into the current quarter, as did second-quarter demand, and "Our customers have also told us to expect further increases for the second half."
With operating margins of almost 18% and the production shift out of China complete, the company is well-positioned as an under-the-radar stock to play data center and semiconductor spending growth in 2026.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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