Veeco Instruments Inc.

Second-quarter revenue was $193 million. Semiconductor revenue was $131 million, up 20% sequentially and 68% of total revenue; compound semiconductor revenue was $21 million, up 9% sequentially; data storage revenue was $22 million, up 117% sequentially; and scientific and other revenue was $20 million, flat sequentially. Non-GAAP gross margin was 39.5%, operating expenses were $53.3 million, net income was approximately $22 million, and diluted EPS was $0.33 on 67 million shares. Cash and short-term investments ended at $429 million, up $46 million, with cash from operations of $51 million and CapEx of $4 million. For Q3, the company guided to revenue of $200 million-$220 million, gross margin of 41%-42%, OpEx of $57 million-$58 million, and EPS of $0.35-$0.49. For full-year 2026, Veeco now expects revenue of $780 million-$810 million, gross margin of 40%-42%, OpEx of $215 million-$225 million, and EPS of $1.36-$1.61. Management said it expects semiconductor revenue to grow by more than 10% in 2026, compound semiconductor revenue to approximately double, and data storage revenue to double year over year.

Bill Miller framed the quarter as a sign that Veeco is at an inflection point, with AI infrastructure, high-performance computing, advanced packaging, and silicon photonics driving demand. He emphasized that the company is gaining traction in advanced packaging, annealing, and silicon photonics, including a $200 million advanced packaging order, a follow-on order for the next-generation nanosecond annealing system, and the selection of Lumina+ MOCVD by a global optical/photonics leader. His tone was confident and upbeat, but he repeatedly tied near-term spending to building capacity for 2027 demand.

John Kiernan focused on the financial upside from stronger order momentum and the near-term costs of scaling the business. He said the higher full-year outlook is accompanied by about $10 million of incremental operating expense and roughly a 75 basis point gross margin impact from investments in manufacturing capacity, hiring, training, and contract manufacturing expansion, including a plan to more than double capacity in advanced packaging and silicon photonics in 2027. He also noted stronger cash generation, with $429 million in cash and short-term investments, $51 million of operating cash flow, and $4 million of CapEx in Q2.

Analyst Denis Pyatchanin pressed on why revenue guidance rose while EPS guidance moved lower, and management explained that the $200 million advanced packaging order is mostly a 2027 revenue event, while current-year margin and EPS pressure comes from capacity build-out costs and higher OpEx. He also asked about the revenue ramp timing; Bill Miller said most of the new business begins to ramp late in Q4 2026 and then more meaningfully in Q1 and Q2 2027. On visibility, John Kiernan said customer forecasts are now extending well beyond 2027, giving Veeco stronger visibility than it has historically had at this point in the year.