Diodes NASDAQ: DIOD reported second-quarter revenue growth of 22% from a year earlier and issued third-quarter guidance that calls for continued expansion in sales, gross margin and adjusted earnings, citing demand across automotive, industrial and AI-related applications.
Revenue for the quarter ended June 30 was $445.5 million, up from $366.2 million in the same period of 2025 and 10% above $405.5 million in the first quarter. President and CEO Gary Yu said the result marked the company’s sixth consecutive quarter of double-digit year-over-year revenue growth and was supported by growth in every geographic region as well as record global point-of-sale activity.
Yu said Diodes’ automotive revenue reached a record 21% of product revenue during the quarter. He attributed the performance to expanding semiconductor content and market-share gains in automotive, industrial and AI-server applications.
Profitability Improved as Revenue Expanded
Second-quarter gross profit was $147.6 million, representing a gross margin of 33.1%, compared with 31.5% a year earlier and 31.8% in the prior quarter. Yu said cost and operating initiatives implemented during the market slowdown contributed to a 160-basis-point year-over-year improvement in gross margin.
GAAP net income was $46.6 million, or $1.00 per diluted share, compared with $46.1 million, or $0.99 per diluted share, in the prior-year quarter. The GAAP result included approximately $20 million in unrealized gains on investments, according to CFO Brett Whitmire.
On a non-GAAP basis, adjusted net income was $32.5 million, or $0.70 per diluted share, compared with $15 million, or $0.32 per diluted share, a year ago and $19.8 million, or $0.43 per diluted share, in the first quarter. Adjusted results excluded, net of tax, investment gains, acquisition-related intangible amortization, board and officer retirement expenses, and acquisition-related costs.
Cash flow from operations totaled $68.5 million, while free cash flow was $34.8 million after $33.6 million in capital expenditures. The company had approximately $442 million in cash equivalents, restricted cash and short-term investments at quarter-end, against approximately $40 million of total debt.
Inventory days declined to approximately 152 from 157 in the first quarter. Finished-goods inventory days fell to 51 from 55. Whitmire said inventory dollars increased by $11.8 million to $504.6 million to support customer requirements, anticipated growth and longer manufacturing lead times.
Third-Quarter Outlook Calls for Further Growth
For the third quarter, Diodes expects revenue of approximately $510 million, plus or minus 3%. At the midpoint, that would represent a 30% year-over-year increase and a 14% sequential increase.
The company forecast GAAP gross margin of 35%, plus or minus 1%, and non-GAAP adjusted earnings per share of $1.05, plus or minus $0.10. Yu said the expected results would include another 190 basis points of sequential gross-margin improvement and bring the company closer to its three-year targets of $2 billion in annual revenue and more than $4 in non-GAAP EPS.
Senior Vice President of Worldwide Sales and Marketing Emily Yang said Diodes expects growth in nearly all end markets during the third quarter. She identified AI-related applications, particularly server motherboards, automotive market-share gains, industrial recovery, seasonal consumer demand and networking demand as expected contributors.
Automotive and Computing Led End-Market Growth
Automotive revenue increased 15% sequentially and more than 37% year over year, Yang said. The company cited demand for voltage-translation ICs, power-management products, networking devices, power protection, motor control, automotive lighting and electrification-related components.
Industrial revenue grew 5% sequentially and more than 24% from a year earlier. Yang said demand was supported by AI infrastructure, automation, robotics, energy management, healthcare and smart-infrastructure applications. The company also pointed to the shift toward 400-volt and 800-volt power architectures in AI-related applications as a potential driver for its power-management and discrete-product portfolios.
Computing revenue rose 18% sequentially and 33% year over year, making it the company’s strongest growth driver, according to Yang. She said Diodes secured multiple server-platform design wins for clock generators and timing solutions as customers transition to newer PCI Express architectures. New timing products are ramping into AI-server platforms, she added.
Consumer revenue increased almost 10% sequentially and 17% year over year, though Yang said the overall market remained affected by memory shortages and slower demand. Communication revenue declined 7% sequentially and about 3% year over year, reflecting softer Chinese smartphone demand. Networking demand remained strong, Yang said, aided by investment in AI infrastructure and enterprise networking.
Elevate Deal and Capacity Plans
Yu also discussed Diodes’ proposed acquisition of Elevate Semiconductor, a fabless semiconductor company focused on integrated circuits for automated test equipment. He said the acquisition would add a higher-margin product line centered on low-power, high-density signal-chain amplifiers and data converters, complementing Diodes’ analog and mixed-signal portfolio.
The company expects the transaction to be immediately accretive and to add roughly $15 million of revenue in the first 12 months after closing. Yu said Elevate’s revenue is expected to grow at a compound annual rate above 20% over the following four years, with gross margin “significantly higher” than Diodes’ corporate average.
On manufacturing, Yu said Diodes is increasing utilization at its wafer fabs, migrating some production from six-inch to eight-inch wafers and using external partners in Korea and Taiwan to add capacity. He said the company performs about 75% of assembly and testing internally and is selectively expanding capacity for packages including DFN and CSP. Diodes currently produces about half of its wafers internally and sources the other half externally, he said.
Yang said channel inventory declined both in dollars and weeks during the quarter and remained below the company’s normal range of 11 to 14 weeks. In response to a question about potential double ordering, she said the company did not see evidence of double booking or shipments building channel inventory.
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.
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.
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
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
