Diodes NASDAQ: DIOD reported first-quarter 2026 results that management said reflected a continued recovery in demand and growing momentum in automotive, industrial, and AI server-related applications. President and CEO Gary Yu said revenue increased 22% year-over-year and rose 3.5% sequentially, which he described as “above seasonal,” noting that the company typically sees a decline in the first quarter.
Revenue growth led by Europe; margins improved
Yu said Europe led the quarter’s growth as Diodes benefited from “increased opportunities and orders from automotive customers” and improved industrial demand. He added that gross margin improved 70 basis points sequentially, attributing the increase primarily to higher revenue contribution from automotive and industrial markets—44% of product revenue combined—and improving utilization.
Yu also pointed to operating leverage, saying the company delivered “an over 100% year-over-year increase in quarterly earnings.” He referenced Diodes’ previously announced three-year interim financial targets, which include $2 billion in annual revenue, $700 million in gross profit, and more than $4 in non-GAAP EPS, calling the first quarter “a great first step toward executing on these goals.”
First-quarter financial results
The company reported revenue of $405.5 million, up 22.1% from $332.1 million a year earlier and up 3.5% from $391.6 million in the prior quarter. Gross profit was $128.8 million, or 31.8% of revenue, compared with 31.5% in the year-ago quarter and 31.1% in the prior quarter.
GAAP operating expenses were $109.0 million, or 26.9% of revenue. On a non-GAAP basis, operating expenses were $103.9 million, or 25.6% of revenue, excluding $3.9 million of amortization of acquisition-related intangible assets and $1.1 million of board and officer retirement expense.
Other income totaled approximately $2.7 million, including interest income and unrealized investment gains, offset by foreign currency losses, an impairment loss on an equity investment, and interest expense. Income before taxes, equity in net earnings of equity investments, and non-controlling interest was $22.4 million, compared with a loss of $2.8 million in the prior-year period and $16.8 million in the prior quarter. The effective tax rate was approximately 19.9% for the quarter; management said it continues to expect a full-year rate of about 18% plus or minus 3%.
GAAP net income was $15.0 million, or $0.32 per diluted share, compared with a GAAP net loss of $4.4 million, or a loss of $0.10 per diluted share, a year earlier. In the prior quarter, GAAP net income was $10.2 million, or $0.22 per diluted share. The share count used to compute GAAP diluted EPS was 46.1 million shares.
Non-GAAP adjusted net income was $19.8 million, or $0.43 per diluted share, excluding (net of tax) $3.2 million of acquisition-related intangible amortization, $0.9 million in board and officer retirement expense, and $0.7 million of loss on investment. EBITDA was $49.4 million, or 12.2% of revenue, compared with $26.2 million (7.9% of revenue) a year ago and $41.9 million (10.7% of revenue) in the prior quarter.
Cash flow, inventory, and balance sheet
Cash flow from operations was $64.3 million, up from $38.1 million in the prior quarter. Free cash flow was $32.4 million, an increase of $20.0 million sequentially, and included $31.9 million of capital expenditures. Net cash flow was positive $26.9 million, “despite the higher CapEx spending compared to last quarter,” management said.
On the balance sheet, cash equivalents, restricted cash, and short-term investments totaled approximately $409 million at quarter-end. Working capital was approximately $891 million. Total debt, including long-term and short-term, was approximately $55 million.
Inventory days were approximately 157, down from 161 in the prior quarter and down about 30 days from 187 days in the year-ago quarter. Finished goods inventory days were 55, compared to 59 the prior quarter. Total inventory dollars increased $21.2 million sequentially to $492.8 million, driven by a $24.0 million increase in raw materials and a $0.5 million increase in work-in-process, partially offset by a $3.3 million decrease in finished goods.
End-market trends and AI-related opportunities
Senior Vice President of Worldwide Sales and Marketing Emily Yang said first-quarter revenue came in at the high end of guidance and was driven mainly by strong demand in Europe, followed by Asia. She said global POS increased sequentially and channel inventory decreased again, both in dollars and in weeks, reaching the lower end of Diodes’ normal range of 11 to 14 weeks. Yang added that Diodes continues to benefit from “market supply disruption” and remains “strategically selective” with a focus on long-term demand creation.
By geography, Yang said Asia represented 77% of revenue, Europe 14%, and North America 9%. By end market, industrial was 24% of product revenue, automotive 20%, computing 26%, consumer 17%, and communication 13%.
- Automotive: Yang said automotive revenue rose 3.8% sequentially and more than 32% year-over-year, with improving visibility and design win momentum across ADAS, telematics, infotainment, protection devices, power management, motor drives, and lighting. She also cited traction for silicon carbide MOSFETs and other devices in electrification-related applications.
- Industrial: Industrial revenue grew to 24% of product revenue from 22% last quarter, up 13.2% quarter-over-quarter and more than 31% year-over-year. Yang said demand recovery was strongest in Europe and that “much of this strength” was being driven by AI infrastructure, including AI server power supply units, thermal management, and battery backup applications.
- Computing: Computing revenue declined 3.7% sequentially but grew more than 21% year-over-year, with Yang citing continued strength in AI server and data center demand. She said notebooks and motherboards moderated due to a softer market and a memory shortage.
- Consumer and communication: Yang said both categories increased 3.8% sequentially, with consumer up more than 26% year-over-year and communication up more than 17% year-over-year, supported by charging, gaming, smart home applications, and data center networking-related demand.
On the AI opportunity, Yang told analysts the company views AI as “a whole ecosystem,” spanning not only AI servers but also power supply units (which she categorized under industrial), networking switches and routers, and optical modules. When asked for sizing, she did not provide a percentage of revenue, but reiterated that Diodes is seeing momentum in AI server ramps and power supply opportunities, including those related to higher-voltage architectures.
Capacity, qualifications, pricing, and second-quarter outlook
During Q&A, Yang said constrained supply conditions can make customers more willing to pursue qualifications, particularly when long-term supply is assured, but added that process qualification “does take time.” Yu said Diodes has been shipping products made at its wafer fabs in Scotland and South Portland since last year and expects utilization at those sites to improve “probably 2027, 2028,” while noting the company’s back-end operations are “almost fully load at this moment.”
Asked about pricing, Yang said first-quarter pricing was “really, really stabilized,” and that any change was “mainly driven by the product mix change.” She added that in constrained supply situations, pricing can stabilize or trend upward across end markets.
Yang also addressed whether Europe’s strength was driven by restocking, saying the company is seeing “real demand” rather than replenishment, pointing to lower channel inventory and higher POS resell.
For the second quarter, CFO Brett Whitmire guided revenue to approximately $435 million plus or minus 3%, which at the midpoint would represent 18.8% year-over-year growth and 7.3% sequential growth. GAAP gross margin is expected to be 32.8% plus or minus 1%, and non-GAAP adjusted EPS is expected to be $0.60 plus or minus $0.10.
About Diodes NASDAQ: DIOD
Diodes Incorporated NASDAQ: DIOD is a global manufacturer and supplier of high‐performance discrete, logic, analog and mixed‐signal semiconductor products. Headquartered in Plano, Texas, the company designs and develops a broad range of discrete components, standard logic functions, power management circuits, interface products and array products. Its portfolio includes rectifiers, MOSFETs, general‐purpose diodes, voltage regulators, comparators, buffers and other building blocks for electronic systems.
Diodes Incorporated serves a variety of end markets such as automotive, computing, communications, consumer electronics, industrial and lighting.
See Also
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Diodes, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Diodes wasn't on the list.
While Diodes currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Nuclear energy is entering a new growth cycle as rising power demand, expanding data centers, and renewed policy support bring the sector back into focus. After strong gains in recent years, the most impactful phase of nuclear investment may still be ahead.
This report highlights seven nuclear energy stocks positioned across the value chain—combining near-term revenue with long-term upside as next-generation technologies scale. Click the link below to unlock the full list.
Get This Free Report
