We value AEIS at $140 or ~25x our 2026E EPS discounted back. AEIS's 3-year average multiple is 17x. We use a multiple above the 3-year average to reflect gross margin expansion and a greater percentage of revenue tied to non-semi markets.

Upside risks to the shares reaching our target price include: 1) technology inflections driving premium pricing; 2) higher-than-expected semi capex environment; and 3) increasing needs for power efficiency and density driven by AI secular trend.

Downside risks to shares reaching our target price include: 1) weaker-than-anticipated demand; 2) macro weakness that impacts both the semi and non-semi business; and 3) slower-than-expected adoption of new products.