Cognex Touts AI Vision Growth Across Data Centers, Semis and China

Key Points

• AI-powered machine vision is opening new applications for Cognex across data centers, semiconductors, electronics, packaging and logistics. Its In-Sight 3900 and OneVision tools can train models in the cloud while running inspections on-device for faster, more secure and predictable-cost operations.
• Cognex reported strong market expansion, including more than 40% China growth so far this year and significant customer additions. Semiconductor capacity investments, broad electronics demand and packaging diversification are supporting growth beyond its core logistics market.
• Operating efficiency has lifted adjusted EBITDA margins from 17% in 2024 to approximately 30% guidance for this year, although higher memory costs are expected to create a 75-basis-point gross-margin headwind in the third quarter. The company also plans opportunistic share buybacks and acquisitions.

Cognex NASDAQ: CGNX Chief Financial Officer Dennis Fehr said the machine-vision company is pursuing growth across logistics, packaging, semiconductors, electronics and data-center supply chains, supported by artificial intelligence-enabled products, an expanded customer base and operating-efficiency initiatives.

Speaking at Morgan Stanley’s 14th Annual Laguna Conference, Fehr said Cognex helps customers inspect products and components, identify parts in production and logistics settings, measure and gauge items, and guide robotic arms. Logistics remains the company’s largest end market, while its other markets include semiconductors, packaging and electronics.

AI tools target new industrial applications

Fehr said customer needs differ by end market. Packaging customers seek higher production-line throughput and product-quality inspection, while logistics and warehouse-automation customers are focused on labor shortages and the cost of moving parcels through e-commerce networks. Semiconductor customers are primarily expanding production capacity, he said.

Cognex is also using AI-based vision tools to address applications that customers previously handled with human inspection or could not solve with machine vision, according to Fehr.

He highlighted the company’s In-Sight 3900 product and OneVision cloud-based AI training tool as enabling new data-center applications. Cognex systems can be mounted on robotic arms to inspect server racks, taking images and verifying between 100 and 200 inspection points, he said. The systems are intended to identify issues before racks are shipped to data centers.

Fehr said OneVision allows customers to train machine-vision models in the cloud before deploying the trained models onto devices at production sites. That approach is intended to preserve on-device processing advantages, including speed, cybersecurity and avoiding variable cloud-processing costs, while using cloud computing for more difficult model training.

“We are really providing this bridge for the customers to use the power of the cloud, but to avoid the pitfalls of the cloud,” Fehr said, adding that Cognex believes the offering is unique in the industry.

Semiconductor capacity, broader electronics demand

In semiconductors, Fehr said Cognex is benefiting from the build-out of AI infrastructure and related capacity additions. He characterized the semiconductor opportunity as more of a capacity-expansion cycle than a penetration opportunity.

Electronics demand, meanwhile, has been broad-based rather than dependent on a single customer or product category, he said. While new form factors such as foldable phones contribute to demand, Fehr said growth is also being driven by higher device volumes, AI gadgets, wearables and glasses. Cognex also has a smaller but growing business serving the data-center supply chain through server-rack assembly verification.

Packaging has become a significant diversification market for Cognex. Fehr said it was the company’s second-largest end market in 2025, compared with not being identified as a major market roughly a decade earlier. The company has sought to expand its packaging customer base and introduce AI applications suited to high-speed inspection requirements.

Unlike electronics, packaging is not a highly cyclical market, Fehr said, making it part of Cognex’s effort to build a more stable growth profile.

China growth and customer expansion

Fehr said Cognex has shifted “from defense into offense” in China over the past 18 months. In 2024, the company responded to local competitors by lowering prices on older-generation products to defend market share. Since then, Cognex has reorganized its sales operations, invested in products designed for China and strengthened local distribution, he said.

According to Fehr, Cognex had grown more than 40% in China so far this year, which he said indicated the company was growing faster than the market and taking share. He added that the company has been able to grow and raise prices in the region.

Cognex added 9,000 customers in 2025, three times the number added in 2024, and added another 4,500 customers during the first half of 2026, Fehr said. The company’s customer-acquisition strategy includes separate sales roles focused on winning new customers, serving established end users and supporting machine builders.

Management’s next focus is expanding relationships with recently acquired customers, including through product offerings, customer support and improved programs for system integrators and machine builders, Fehr said.

Margins, costs and capital allocation

Fehr said Cognex has improved its adjusted EBITDA margin from 17% in 2024 to the midpoint of its 30% guidance for this year. The improvement has been driven by operating-expense efficiency and cost-reduction programs, alongside stronger revenue growth, he said.

During the second quarter, Cognex recorded 100% revenue fall-through to the bottom line, Fehr said. Looking ahead, he said the company aims to continue growing revenue without significant operating-expense expansion beyond inflationary increases.

The company is monitoring inflation in memory components and said it expected a 75-basis-point gross-margin headwind in the third quarter from higher memory costs. Fehr said Cognex has been able to use pricing to offset higher costs and does not currently expect component supply conditions to restrict growth.

On capital allocation, Fehr said Cognex returned nearly $250 million through share repurchases over the past 18 months, excluding dividends. The company expects buybacks to remain opportunistic, particularly during market pullbacks. It also intends to use mergers and acquisitions as part of its growth and diversification strategy, provided it finds suitable targets at acceptable prices.

About Cognex (NASDAQ:CGNX)

Cognex Corporation NASDAQ: CGNX develops machine vision technologies that help businesses automate inspection, identification, measurement and guidance tasks. Its systems enable manufacturing and logistics operations to analyze images and make decisions about products, components and packages.

The company's product portfolio includes industrial cameras, vision sensors, barcode readers, three-dimensional vision systems and machine vision software. Cognex also offers artificial intelligence and deep-learning tools designed to address complex inspection and classification applications, along with engineering, implementation and support services.

Founded in 1981 by Robert J.

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