CGNX

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at specialized technology stocks, starting with Cognex (NASDAQ:CGNX). Companies in this sector, especially if they invest wisely, could see demand tailwinds as the world moves towards more IoT (Internet of Things), automation, and analytics. Enterprises across most industries will balk at taking these journeys solo and will enlist companies with expertise and scale in these areas. However, headwinds could include rising competition from larger technology firms, as digitization lowers barriers to entry in the space. Additionally, companies in the space will likely face evolving regulatory scrutiny over data privacy, particularly for surveillance and security technologies. This could make companies have to continually pivot and invest. The 8 specialized technology stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 6% above. While some specialized technology stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.3% since the latest earnings results. Founded in 1981 when computer vision was in its infancy, Cognex (NASDAQ:CGNX) develops machine vision systems and software that help manufacturers and logistics companies automate quality inspection and tracking of products. Cognex reported revenues of $291.3 million, up 16.9% year on year. This print fell short of analysts’ expectations by 0.7%, but it was still a very strong quarter for the company with revenue guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ full-year EPS guidance estimates. Cognex achieved the highest guidance raise of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 15.1% since reporting and currently trades at $60.01. Is now the time to buy Cognex? Access our full analysis of the earnings results here, it’s free. Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ:NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems. Napco reported revenues of $55.81 million, up 10% year on year, outperforming analysts’ expectations by 6.2%. The business had an incredible quarter with a beat of analysts’ EPS estimates. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 6.3% since reporting. It currently trades at $35.68. Is now the time to buy Napco? Access our full analysis of the earnings results here, it’s free. With security scanners deployed at airports and borders worldwide and patient monitors used in hospitals across the globe, OSI Systems (NASDAQ:OSIS) designs and manufactures specialized electronic systems for security screening, patient monitoring, and optoelectronic applications. OSI Systems reported revenues of $484.1 million, down 4.1% year on year, falling short of analysts’ expectations by 8.5%. It was a softer quarter as it posted full-year revenue guidance missing analysts’ expectations and a slight miss of analysts’ full-year EPS guidance estimates. OSI Systems delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. As expected, the stock is down 5.2% since the results and currently trades at $206.83. Read our full analysis of OSI Systems’s results here. Originally founded in 1968 as a defense contractor for the U.S. government, PAR Technology (NYSE:PAR) provides cloud-based software, payment processing, and hardware solutions that help restaurants manage everything from point-of-sale to customer loyalty programs. PAR Technology reported revenues of $133.4 million, up 18.7% year on year. This result beat analysts’ expectations by 6.5%. Overall, it was a very strong quarter as it also logged a beat of analysts’ EPS estimates and revenue guidance for next quarter beating analysts’ expectations. PAR Technology pulled off the biggest analyst estimate beat and highest full-year guidance raise, but had the weakest guidance update among its peers. The stock is up 11.4% since reporting and currently trades at $19.08. Read our full, actionable report on PAR Technology here, it’s free. Taking its name from the black and white stripes of barcodes, Zebra Technologies (NASDAQ:ZBRA) provides barcode scanners, mobile computers, RFID systems, and other data capture technologies that help businesses track assets and optimize operations. Zebra reported revenues of $1.56 billion, up 20.4% year on year. This print surpassed analysts’ expectations by 3.9%. It was an incredible quarter as it also recorded a solid beat of analysts’ organic revenue estimates and a beat of analysts’ EPS estimates. The stock is up 21% since reporting and currently trades at $352.90. Read our full, actionable report on Zebra here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Cognex Corporation (CGNX) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving. The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank. The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008. For Cognex Corporation, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year. The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate: For the current quarter, the company is expected to earn $0.50 per share, which is a change of +51.5% from the year-ago reported number. The Zacks Consensus Estimate for Cognex has increased 41.61% over the last 30 days, as three estimates have gone higher compared to no negative revisions. The company is expected to earn $1.65 per share for the full year, which represents a change of +61.8% from the prior-year number. In terms of estimate revisions, the trend for the current year also appears quite encouraging for Cognex. Over the past month, six estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 13.41%. The promising estimate revisions have helped Cognex earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500. While strong estimate revisions for Cognex have attracted decent investments and pushed the stock 6.8% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cognex Corporation (CGNX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Cognex (CGNX) is back on investor radars after releasing second quarter 2026 results along with fresh revenue guidance for the third quarter and full year, plus a confirmed quarterly dividend. See our latest analysis for Cognex. Cognex shares closed at US$63.41 after the guidance and dividend update, with the 1 day share price return slipping 4.79% yet the year to date share price return still up 71.70%. The 1 year total shareholder return is 46.85% and the 5 year total shareholder return is down 24.97%, which suggests strong recent momentum following a weaker longer term run. If Cognex’s move has you watching automation and AI closely, this is a good time to scan other robotics and automation opportunities through the Simply Wall St screener for 37 robotics and automation stocks. After that sharp run and the latest pullback on Cognex, the real tension is between locking in exposure now or waiting for a friendlier entry. How does the current price compare with the underlying numbers? The most followed Cognex valuation narrative points to a fair value of $80.42 versus the last close at $63.41, which implies a meaningful gap that hinges on how its AI vision strategy and margins play out. Read the complete narrative. Want to see what underpins that valuation gap? The narrative leans heavily on compounded revenue growth, fatter margins, and a richer earnings profile that assumes investors keep paying up. Result: Fair Value of $80.42 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Cognex still faces real pressure from cheaper Asian competitors and ongoing hardware commoditization, which could squeeze margins and challenge the AI-driven premium thesis. Find out about the key risks to this Cognex narrative. The fair value narrative suggests Cognex is 21.2% undervalued at $63.41, with a target P/E of 47.1x by 2029. The current P/E is about 61x, while the fair ratio is 33.7x and the peer average is 50.2x. That is a wide gap. Is the premium multiple really justified by future execution? See what the numbers say about this price — find out in our valuation breakdown. The mixed tone on Cognex might leave you unsure, so review the numbers yourself and move fast to shape your own view with the 3 key rewards. If Cognex has sparked your interest, do not stop here. Use this moment to widen your watchlist with other stock ideas filtered by clear, data driven criteria. Target potential bargains first by scanning 50 high quality undervalued stocks that combine appealing prices with solid fundamentals. Strengthen your income stream by hunting for reliable payers through the 11 dividend fortresses before the best yields move away. Prioritise resilience by reviewing the 79 resilient stocks with low risk scores that score well on financial strength and risk factors. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include CGNX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Cognex stock has delivered an 80.3% gain year to date, yet its valuation checks currently lean expensive. That mix of strong recent returns and a weak overall value score raises questions about how much upside is already reflected in the price. The 80.3% rise year to date signals strong investor confidence, which can limit the margin of safety if expectations are already high. Recent product and AI platform developments may support revenue and earnings expectations. However, any slowdown in adoption or end market demand could weigh on what investors are willing to pay for Cognex. Cognex passes only 1 of 6 valuation checks, which suggests the stock is not a clear bargain on the broader measures used here. The issue now is whether Cognex's current share price still offers an attractive entry point after such a strong year to date run. Find out why Cognex's 55.6% return over the last year is lagging behind its peers. The P/E multiple is a useful lens for Cognex because the stock is widely followed through its earnings profile. At around 64.1x, Cognex trades at a higher P/E than both its Electronic industry average of about 30.7x and a peer group average near 53.8x. That signals investors are paying a premium for Cognex stock relative to many companies with similar business models. On a more tailored measure, the fair P/E ratio for Cognex is estimated at about 33.6x once growth, profitability, size and risk are factored in. This is roughly half of the current P/E, which suggests the stock is pricing in a lot of optimism already. Despite the strong Q2 2026 earnings beat and upbeat guidance lifting sentiment, the valuation multiple still screens high against both the modelled fair ratio and sector benchmarks. On the P/E test, Cognex stock currently screens as overvalued compared with its own fair ratio and with key industry and peer benchmarks. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up from this Cognex valuation puzzle and spell out what growth, margin and earnings paths would need to play out for the stock to be worth materially more or less than today’s price on the Community page. Rather than focusing on a single multiple or one model output, each Narrative lays out the assumptions behind its view of fair value so you can compare them with the actual results as they come through. Cognex investors are weighing two very different storylines, one focused on AI powered expansion and the other on pressure from commoditization and cyclical demand. Bull case: 17% undervalued Read the full Bull Case to see why Cognex could be undervalued Bear case: roughly fairly valued Read the full Bear Case to see why Cognex could be overvalued Do you think there's more to the story for Cognex? Head over to our Community to see what others are saying! Cognex now trades on a premium P/E that screens as overvalued relative to both peers and its own fair ratio estimate. That does not rule out further gains, but it means a lot already depends on Cognex delivering the growth and margin profile implied by that premium. The crux for investors is whether earnings from AI focused products and vision systems ultimately justify today’s pricing or whether the multiple settles closer to sector norms if adoption or end market demand soften. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include CGNX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Cognex’s second quarter results fell short of Wall Street’s revenue expectations, with management citing a strong demand environment and favorable industrial trends as key drivers. CEO Matt Moschner highlighted that the company’s performance was supported by expanding AI-enabled machine vision platforms and meaningful progress in customer diversification. Despite robust year-over-year sales growth, management acknowledged that operating discipline and recent product introductions played a significant role in margin expansion. On the call, CFO Dennis Fehr emphasized ongoing cost reduction actions and efficiency improvements, which contributed to stronger profitability. Is now the time to buy CGNX? Find out in our full research report (it’s free). Revenue: $291.3 million vs analyst estimates of $293.3 million (16.9% year-on-year growth, 0.7% miss) Adjusted EPS: $0.45 vs analyst estimates of $0.42 (5.9% beat) Adjusted EBITDA: $93.66 million vs analyst estimates of $87.98 million (32.2% margin, 6.5% beat) Revenue Guidance for Q3 CY2026 is $310 million at the midpoint, above analyst estimates of $282.1 million Adjusted EPS guidance for the full year is $1.66 at the midpoint, beating analyst estimates by 11.8% Operating Margin: 29.4%, up from 17.4% in the same quarter last year Market Capitalization: $10.58 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Joseph Ritchie (Goldman Sachs) asked about the drivers behind the expanding data center opportunity. CEO Matt Moschner explained that both increased AI complexity and aggressive facility build-outs are creating long-term demand for Cognex’s vision systems. Tomohiko Sano (JPMorgan) inquired about customer reactions to new AI-powered products and how they influence the pipeline. Moschner highlighted strong reception to the latest 2D inspection demos, particularly in complex electronics and server rack applications. Thomas Moll (Stephens) questioned progress on customer acquisition and whether it requires further sales force expansion. Moschner noted that growth is increasingly driven by channel partners, reducing the need for additional direct sales hires. Guy Hardwick (Barclays) probed the implications of price increases for gross margins. CFO Dennis Fehr acknowledged that recent pricing actions will help offset memory cost inflation, but timing mismatches may temporarily impact margins. Jacob Levinson (Melius Research) asked about potential volume slowdowns in electronics due to higher memory prices. Moschner responded that demand remains strong, with growth supported by technology shifts and channel expansion, though risks are being monitored. In the coming quarters, the StockStory team will be tracking (1) the pace of adoption for Cognex’s new AI-powered vision products, (2) the ability to further expand and monetize its customer base through channel partnerships, and (3) the impact of memory price trends and supply chain dynamics on gross margins. Progress in data center and electronics verticals will also be critical to sustaining momentum. Cognex currently trades at $63.47, down from $70.71 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 8:30 a.m. ET Head of Investor Relations - Greer Aviv Chief Executive Officer - Matt Moschner Chief Financial Officer - Dennis Fehr Operator: Greetings, and welcome to the Cognex Corporation Second Quarter 2026 Earnings Conference Call.[Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Greer Aviv, Head of Investor Relations. Thank you. You may begin. Greer Aviv: Thank you, operator. Good morning, everyone, and thank you for joining us. Our earnings release was published yesterday after market close, and our 10-Q was filed this morning. The earnings materials are available on our Investor Relations website. I am joined here today by Matt Moschner, our CEO; and Dennis Fehr, our CFO. Today, we plan to share several key messages, including progress against our strategy, opportunities to drive diversified growth, end market trends, our strong second quarter performance and our expectations for the third quarter and full year. After prepared remarks, we'll open the line for Q&A. Both our published materials and the call today will reference non-GAAP measures. You can find a reconciliation of certain items from GAAP to non-GAAP in our press release and earnings presentation. Today's earnings materials will contain forward-looking statements, including statements regarding our expectations. Our actual results may differ from our projections due to the risks and uncertainties that are described in our SEC filings, including our most recent Form 10-K. With that, I'll turn the call over to Matt. Matt Moschner: Thanks, Greer. Good morning, everyone, and thank you for joining us today. Q2 was another strong quarter for Cognex and further evidence that our strategy is driving results. We delivered record quarterly revenue, significant adjusted EBITDA margin expansion and strong double-digit adjusted EPS growth. The demand environment remains favorable with no material negative impact from macroeconomic or geopolitical events. We continue to benefit from an improving industrial cycle while also seeing accelerating adoption of automation and AI-enabled machine vision. Importantly, our performance reflects more than cyclical recovery. It reflects focused execution against the strategic objectives we have outlined for Cognex, along with the operating discipline required to convert growth into profitability. Our focus remains on profitable growth, operational excellence and productivity across the organization. Turning to Page 3 of our earnings presentation. I'll start with a strategy update. First, we are extending our technology leadership in AI-enabled machine vision using the OneVision platform to enable new AI-driven applications and expand into high-growth end markets, including the data center supply chain. Recently, we announced the general availability of OneVision with hundreds of customers already using the platform to reduce deployment complexity, shorten time to value and scale AI-driven vision applications. Second, we are focused on delivering the #1 customer experience in the industry. As part of this journey, we are building the most comprehensive and easy-to-use machine vision ecosystem. Recent product launches have meaningfully expanded the breadth of our portfolio, giving customers access to new cutting-edge capabilities, all within the same In-sight Vision Suite software environment. Customers can now address entry-level inspection applications with the In-sight 2800, perform advanced 3D inspection with the Insight L38, perform complex inspections with the new Insight 3900 and gain maximum flexibility for the most demanding applications with the Insight 6900. Just as importantly, we are making our products easier to evaluate, deploy and support by enhancing Intuitive product setup, expanding self-service resources and continuing to drive efficiency through a unified software ecosystem. Third, we are focused on driving growth through diversification. We are targeting growth across a broader set of customers, channels, adjacencies and end markets. While these initiatives will take time, they are central to building a more resilient and scalable business. Let's take a closer look at each of these areas on Page 4. Starting with customers, we are very pleased with the progress we have made towards our objective of doubling the customer base. In 2025, we added approximately 9,000 new customers and momentum continued in 2026 with approximately 4,500 new customers added year-to-date. This success meaningfully diversifies the customers we serve and broadens our opportunity set. As we look ahead, our focus will increasingly shift towards a land and expand strategy, building on these new relationships, identifying the right high potential accounts and capturing a greater share of wallet over time. As we continue our Salesforce transformation, we are revitalizing our channel partner program to strengthen our overall go-to-market. By working more intentionally with our global network of systems integrators, machine builders and services partners, we can better identify new opportunities, fulfill demand more effectively and bring Cognex products to a broader set of customers, applications and end markets efficiently. We will also continue to explore opportunities in adjacent markets, both organically and inorganically, where our deep domain expertise can extend to solve critical automation challenges and create meaningful long-term growth. Finally, we have a strong track record of identifying attractive new end markets and scaling them into meaningful growth platforms. Logistics is a great example. When we entered the logistics market about 10 years ago, it represented only a single-digit percentage of total revenue. Today, logistics is our largest vertical. We are applying that same playbook as we expand into the data center supply chain market. Today, data center represents only a low single-digit percentage of revenue, but is growing more than 30% year-over-year. While still early, we believe the data center supply chain has compelling strategic characteristics. It is aligned with powerful secular growth trends, requires high levels of quality and throughput and creates opportunities for Cognex to help customers improve productivity through automation. It also reinforces how our AI leadership can open new growth platforms over time. Turning to Page 5. Let's look at real-world example of how our technology is helping customers solve complex inspection challenges in this market. This is a server rack inspection deployment using our newest technologies, including the Insight 3900 in OneVision. For this application, Cognex vision systems will be mounted on robots to inspect fully assembled server racks and confirm that all major components are installed correctly and meet strict quality requirements. This demonstrates the broader applicability of our AI-enabled machine vision systems beyond our traditional end markets and also provides an entry point into AI infrastructure manufacturing, a rapidly growing market. Turning to end market performance on Page 6. The demand environment remained favorable in the second quarter. Growth was led by semiconductor, electronics and packaging, along with continued momentum from large logistics customers. Manufacturing indicators continue to improve across key regions in the second quarter, and the U.S. Purchasing Managers Index has now remained in expansion territory for 7 consecutive months. This improving macro backdrop, along with better visibility into the second half, gives us confidence to raise our full year outlook for nearly all end markets. Starting with logistics. Momentum continued driven by large e-commerce customers. Q2 marked our 10th consecutive quarter of double-digit growth. Given the strength of our first half performance, we are raising our full year outlook for logistics to high single-digit growth while continuing to expect growth rates to moderate in the second half. Packaging delivered strong performance. Excluding the divestiture of the Japan-focused trading business, packaging grew double digits. Based on this momentum, we are increasing our full year packaging outlook to double-digit growth. Electronics growth was very strong with double-digit growth driven by broad-based demand across customers and geographies. AI is driving a new wave of innovation in electronics as manufacturers incorporate increasingly sophisticated functionality into next-generation devices. For 2026, we are increasing our full year outlook for electronics and now expect double-digit growth. Automotive revenue declined high single digits in the quarter, but was nearly flat year-to-date. Growth in Asia and the Americas was offset by continued weakness in Europe. We are maintaining our full year outlook for automotive of flat to low single-digit growth. Finally, Semiconductor delivered exceptional performance with strong double-digit revenue across all geographies. Demand continues to be driven by AI infrastructure investment. And based on this strength, we are increasing our full year outlook for semiconductor to double-digit growth. In summary, we are encouraged by the demand environment and pleased with our execution. Cognex is benefiting from both cyclical recovery and structural automation trends while continuing to diversify the business, expand margins and position the company for sustainable growth through 2027 and beyond. With that, I'll turn it over to Dennis to walk through our Q2 financials and our outlook for the third quarter and full year. Dennis? Dennis Fehr: Thanks, Matt, and good morning, everyone. Q2 was a strong financial quarter with record revenue and excellent flow-through to the bottom line. Page 7 highlights our performance across 3 key financial metrics. First, adjusted EBITDA margin was 32.2%, expanding 1,150 basis points year-over-year and marking the eighth consecutive quarter of margin expansion. Second, adjusted EPS increased 80% year-over-year, representing the eighth consecutive quarter of double-digit EPS growth. And third, trailing 12-month free cash flow conversion rate was 114%, meeting our greater than 100% target for the seventh consecutive quarter. Our strong bottom line performance reflects continued execution of our profitable growth strategy and faster progress on cost reduction initiatives, resulting in about 100% revenue flow-through in the quarter. Turning to the income statement on Page 8. Revenue increased 17% year-over-year or 16% in constant currency, reaching a record quarterly revenue level for Cognex. This was also our eighth consecutive quarter of year-over-year revenue growth. Looking at geographic revenue trends on a year-over-year constant currency basis. China was again our fastest-growing region with revenue increasing 42%, led by semiconductor and electronics. Year-to-date, revenue in China is up 40%, driven in part by investments made over the past 12 to 18 months. In the Americas, revenue grew 27% with strength across nearly all end markets. Americas revenue also benefited from certain electronics customers ordering through entities based in the Americas rather than Europe. This change does not reflect an underlying shift in business mix or customer demand. Excluding this procurement change, Americas revenue still grew double digits. Europe declined 15%. Excluding the procurement change in ordering entities, Europe declined low single digits. Weakness in automotive was partially offset by strength in semiconductor. Other Asia grew 14%, driven primarily by semiconductor. Staying on Page 8. Adjusted gross margin expanded 350 basis points to 71.5%, driven by favorable mix and volume. Tariff refunds were not a material contributor to the strong gross margin performance. Adjusted operating expenses declined 3% year-over-year or 5% in constant currency, supported by accelerated cost reduction actions in the quarter. We now expect approximately $35 million of annualized net cost reductions by the end of 2026. This is closer to the lower end of our originally $35 million to $40 million range, reflecting a balanced approach of disciplined cost management in times of strong growth. Looking ahead, our emphasis is increasingly shifting from cost reduction to our productivity optimization. We see meaningful opportunities to further drive efficiencies through automation and continuous process improvement initiatives by continuing to grow with largely existing resources. Adjusted EBITDA was $94 million, up 81% year-over-year and our highest level since Q2 2021. Adjusted EBITDA margin reached 32.2%, expanding 1,150 basis points year-over-year and exceeding the midpoint of guidance by more than 250 basis points, driven by favorable mix and accelerated cost reduction. Adjusted diluted EPS increased 80% year-over-year to $0.45, driven primarily by operating leverage. Cash generation remains strong. We generated $68 million of free cash flow in the quarter compared to $40 million in the prior year period, representing approximately 70% growth. Over the trailing 12 months, free cash flow totaled $268 million and free cash flow conversion was 114%. We returned nearly 80% of free cash flow to shareholders through both share buybacks and dividends over the trailing 12 months. Moving to Page 9. I'll review our third quarter guidance. For Q3, we expect revenue of $300 million to $320 million, representing approximately 12% growth at the midpoint. Excluding the $13 million onetime benefit from the commercial partnership in Q3 2025, our guidance implies 17% revenue growth at the midpoint. Adjusted EBITDA margin is expected to be between 32% and 35%, with the midpoint representing an increase of 860 basis points year-over-year. Excluding the commercial partnership benefit, the midpoint implies adjusted EBITDA margin expansion of 1,140 basis points. Adjusted earnings per share is expected to be $0.50 to $0.54, with the midpoint representing approximately 58% year-over-year growth. Excluding the commercial partnership benefit, the midpoint implies adjusted EPS growth of 86%. On Page 10, we are issuing full year 2026 guidance. While we continue to monitor macroeconomic and geopolitical risks, including memory market conditions and the broader inflationary environment, our guidance reflects improved visibility into the second half and confidence in our ability to execute our profitable growth strategy. For 2026, we expect revenue of $1.13 billion to $1.15 billion, representing approximately 15% growth at the midpoint or 16% excluding the commercial partnership benefit. Adjusted EBITDA margin is expected to be between 29% and 31%, with the midpoint representing an increase of 850 basis points year-over-year or 930 basis points, excluding the commercial partnership benefit. This is well ahead of our prior target of exiting the year at 25% run rate and reflects disciplined execution of our cost reduction initiatives, along with an improved demand environment. At the midpoint, our outlook also implies approximately 87% flow-through on incremental revenue, up from 70% in 2025, highlighting the substantial operating leverage achieved through our transformation efforts. Adjusted earnings per share is expected to be $1.64 to $1.68, with the midpoint representing approximately 63% year-over-year growth or 71% excluding the commercial partnership benefit. I would note that 2026 adjusted EPS includes approximately $0.11 per share of investment income. As interest rates and cash balances evolve, the benefit from investment income may fluctuate, making year-over-year EPS growth comparisons more challenging on a multiyear basis. Investors should consider this contribution when evaluating EPS growth trends. I'll now briefly update you on baseline revenue assumptions for Q3 and Q4 to support comparability. As shown on Page 11, there are several known items that impact year-over-year comparisons but do not reflect the change in underlying demand. First, portfolio optimization. As discussed last quarter, the divestiture of our Japan-focused trading business, along with other noncore product exits reduces revenue by approximately $5 million beginning in Q2 and each of the following 3 quarters. These actions are intentional and support improved mix, margin and long-term profitability. Second, as expected, we saw approximately $7 million of electronics order timing shift into Q2 from Q3. Third, Q3 and full year 2026 include the previously mentioned $30 million headwind from the onetime commercial partnership benefit. In summary, Q3 headwinds include order timing and portfolio actions, not a change in underlying demand, while Q4 reflects planned portfolio exits. We encourage you to reflect these factors in your models, along with the strong Q4 2025 comparison. Overall, Q2 was another strong proof point for our profitable growth strategy. We delivered record revenue, significant margin expansion. Strong EPS growth and robust free cash flow. Demand remains healthy. Our operating model transformation is delivering results, and our financial model is demonstrating strong leverage. We believe Cognex is exceptionally well positioned to deliver on our commitments and create long-term shareholder value. Now Matt and I are ready for your questions. Operator, please go ahead. Operator: [Operator Instructions]. Our first question is coming from Joe Ritchie of Goldman Sachs. Joseph Ritchie: Congrats on the continued progress. Dennis Fehr: Thanks, Joe. Joseph Ritchie: So my first question, I wanted to expand on the data center opportunity that you referenced earlier, Matt. I'm really curious because like, obviously, data center growth has been robust for the last couple of years. And I'm just -- what I'm wondering, is it -- is the opportunity ahead of you now because there are changes in the products that you're offering? Is there just greater adoption of machine vision for data centers today? Just maybe just expand on what's creating the opportunity for you. Matt Moschner: Yes. No, Thanks, Joe. We've been serving the data center market for several years, but it was always a smaller portion of our business. And the application that we serve there was automated and secure drive removal and destruction, right? Think of this as kind of the ongoing maintenance of the data center. What's changed, obviously, is the very aggressive build-out of new facilities and in particularly very high-tech AI-oriented facilities that are placing demands on the supply chain that are driving demand for Cognex vision. And you can think of it really in 3 major application areas. On one hand, we're working with the manufacturers of the componentry. These are electronic parts, metal parts, sort of the physical infrastructure of a server and of a rack. There's then the assembly of those things into that rack and then there is the deployment and maintenance and operations of that. I would say the majority of where the revenue is coming today, and we, in our prepared remarks, sized that as low single digits of revenue growing at about 30% is mostly in that first bucket, right? We're still mostly doing quality assurance and visual inspection for the component trait, right? These are connectors, these are electrical parts, these are PCB boards, these are metal enclosures. We're starting to see activities flow through to CMs that are assembling those into servers, but still quite early in terms of doing more complete automation once those are deployed into facilities. So I think we're still more on the early side of the growth wave that could come from the investment and build-out of data centers. I would still characterize it as quite nascent. On the technology side, I mean, for sure, as you saw on the slide, these are very complicated inspections, right? On one hand, hundreds of points to be inspected, very fine features and very well suited for AI. And we're seeing that. I'm not sure we could have solved these problems a couple of years ago without technologies like OneVision. So you put those 2 things together, it's a market we know. It's one that is experiencing a huge wave of growth. And I think our technology is very well positioned to capture that probably for the next several years. Joseph Ritchie: That's super helpful, Matt. And then maybe just my follow-up question for Dennis. Look, obviously, organic growth has been very strong, expected to continue to remain strong throughout the year. Interesting, like your OpEx was actually down on a year-over-year basis. Is the expectation for OpEx through the second half of the year to remain down on a year-over-year basis? I just want to make sure that I have that right in the forecast. Dennis Fehr: Yes, Joe, yes, absolutely, I can confirm that. And that's really in line with our $35 million net cost reduction target, which we reemphasized and reconfirmed, right? So I think we made great progress already last year where we had 33 million gross cost reduction, right? Some of them did not show up in the P&L as we had some of the incentive comp headwinds. But in this year, we're really seeing net cost reduction. And so in that regard, bringing down the OpEx in this quarter in the second quarter of 5% in constant currency really kind of shows the strength of the execution there. And we then from there, expect probably a bit smaller step down into the third quarter into the fourth quarter, right, as the step down from the first into the second quarter was already accelerated compared to what we saw previously. So in short, yes, we definitely expect OpEx to stay well below prior year's levels and also in the second half also below the first half. And that's really kind of part of the strength, which we are seeing in the leverage, right? So 100% revenue flow-through in the second quarter, 87% revenue flows through at the midpoint for the full year. Really great to see these numbers and the strength of the execution there. Operator: The next question is coming from Tomo Sano of JPMorgan. Please go ahead. Tomohiko Sano: Matt, at the most recent Automate show, I remember you noted the sense of urgency about the automations. Could you talk about what demo's future generate the strongest customer reactions? And how is that translating into the pipeline and deal ASP, please? Matt Moschner: Yes. Thanks, Tomo. It was nice seeing you at the Automate show. It was great to be there. Great energy. And as you said, I was to summarize the show in one word, it's really urgency. And what is driving that urgency? I think it's really the realization from manufacturers in North America, but frankly, around the world that their ability to automate and drive efficiency, productivity, at the same time, higher levels of quality is table stakes now. It's how they're going to survive and thrive, and it's no longer optional. And so that was very much kind of what was the mood in the air, if you will. Specifically, your question on which demos that we were showing resonated, I think for sure, we were featuring our latest generation of AI tools running on our latest generation of embedded systems. Those are the products that we launched in the spring of this year, OneVision being our cloud training service and then the 3900 and the 6900 really being the upgraded embedded system hardware to run those models all within the same software environment, which is our In-sight Vision Suite application. So that is what we featured. I would say that the headturners were really the inspections, right? Cognex has, for years, led in the area of 2D vision inspection. We've always said that, that was -- there was still a big untapped market for inspections done by humans that were in the past, not technically feasible to solve with machine vision, and we're increasingly solving some of those problems with our latest generation of AI tools. And so we showed very complex PCBA inspections using our 3900. I think that was very well received, again, back to the data center comment, inspecting these very large server boards as they're being built into servers and put into racks, I think very relevant technology. And then on the other hand, we had a demo on our 6900 where we allowed users to kind of mark up pieces of art, right? And Art is very difficult because it's highly variable in its feature set. There was a bit of glare. And so our systems really performed very well, where we were able to pick up very nuanced defects with no incremental training. And so I'd say those 2, the 2D inspection demos featured very well. And that's an area we've really invested in over the last several years where our AI advantage, I would say, is most pronounced at the moment. Tomohiko Sano: And a follow-up on Dennis, if you could talk about the current environment through the margin expansions, like how should we think about the lead times and supply chains, inventories? Is there any like bottlenecks and margin impacts expected in the second half or not? Dennis Fehr: Yes. No, happy to talk about that. So first, in the quarter, we saw we saw strength in the gross margin driven by favorable mix. And then I would also say that certainly on the bottom line, right, the OpEx efficiency, which we had there. But to your question on the supply chain side, right, we have been talking about in the prior call that we expected an impact from memory price headwinds in the second half of the year. And while we are offsetting as much as we can with that through pricing, we clearly have seen that memory prices are further increasing. In that regard, we would now say about 75 basis points of gross margin headwind being included in our Q3 guide. And probably some of that may still also show up in the fourth quarter. While in -- I would say, if you think about '27, we would think like we would fully offset that through pricing. So think about it more like a timing impact that memory prices are going up, we're increasing prices and then memory price is going up further and we'll increase prices further. So I wouldn't say like it's a midterm headwind, but it's a headwind for the second half of the year. And then perhaps that we currently would expect that mix still favorable in the second half of the year, but probably not as strongly favorable in the first half of the year. So in that regard, our Q3 guide as well as our full year 2026 guide expect a gross margin not as strong as in the first half of the year. But nevertheless, we can show strong bottom line performance as we further drive OpEx efficiencies, as just mentioned before. Operator: The next question is coming from Tommy Moll of Stephens. Thomas Moll: I noted you're halfway toward the 9,000 customers you added in 2025. And I'm curious what KPIs you could share around that progress. Clearly, on the net customer adds, there's a lot of progress. But can you share anything in terms of the win rate for these leads that get put into the top of the funnel or the speed of converting those leads? And then relatedly, where are we on the need or lack thereof to continue to hire new cohorts of additional sales folks? Matt Moschner: Yes. Sure, Tony. Thanks. Yes. And really happy with the progress we've made last year and the first half of this year acquiring new customers. It's a key piece of our strategy to diversify, frankly, and build a stronger foundation of growth. At the same time, as we said in our structured remarks, we're thinking, as you rightly point out, as we acquire those customers, how do we expand our business with them, how do we better understand their potential so that we can direct our internal resources to really focus on the accounts where we see higher potential and maybe think of different paths to market or ways to serve on those with lower potential. And so there's a bit of that internally where as we acquire new customers, we, I would say, have a much better way of understanding potential in terms of how we pursue additional opportunities with them. I would say in terms of market verticals, packaging continues to be an area where we are acquiring customers in a very strong way. On one hand, these are manufacturers that have -- that are more regional, perhaps more fragmented to serve their local markets and the production of consumer products and other health care products, a segment that we didn't serve as well in years past. And so I'd say there is a disproportion of customer adds in the packaging area. And then I think your question around as we acquire customers, as we grow the customer base, how does that imply to our sales organization. It's an area where we've invested significantly over the last 5 years to grow our direct sales channel. It's one of the biggest assets we have as a company, hundreds of very talented technical vision experts that consult around the world. But I would say, at the same time, our expectation is not necessarily to continue to invest in that area as we expand our customer count. And this is really where we are emphasizing our channel partners and how do we revitalize the relationships we have with systems integrators, machine builders, services partners to drive productivity in our sales organization while we acquire new customers and diversify that growth basis. So hopefully, that's helpful. Dennis Fehr: And maybe let me add to that and just reemphasize what I said also in the prepared remarks, right? I think 2026 and especially the first half is the time we're really working or have been working to take out costs out of the organization. And I think from here, it's really about growing the existing resources, and that applies to sales, but also to the broader part of the organization. So in that regard, we clearly are looking forward to deliver strong leverage as we continue to grow. Thomas Moll: Yes. That's very helpful. And Matt, you mentioned the point about strengthening the channel relationships, which also falls under this diversification theme that you've talked about at length today. What details can you share there on channel? Should we think of this as enhancing the prior framework you had for channel relationships? Or are there some new strategies here that you could comment on? Matt Moschner: Yes. I think it is more enhancing what we've had and also taking a more coordinated, I'd say, global approach to how we manage those partnerships. We have great partners all over the world. And when I say partners, it's kind of an umbrella term for resellers that are an extension of our sales force, systems integrators and machine builders that add -- that incorporate Cognex vision into their much larger kind of solutions and machines and then systems -- I'm sorry, services partners that are very key to how we deploy at scale machine vision with customers around the world. So partners is kind of that umbrella term for really those 4 main categories. And yes, you can think of us as being a little more coordinated in terms of how we think about the role that they play in each of our geographies, having better scorecards around investments that we're making with them and how do we measure success of those investments. And again, partner with them to be much more coordinated around our joint go-to-market efforts. So I think it is much more about enhancing what we have than a fundamental shift. Yes, and doing it in a way that is, frankly, very complementary to our own direct selling efforts. So I think it would be a mistake to think that an investment in our channel partners is somehow an investment away from our direct sales activities. They are really one and the same as we think about our overall go-to-market strategy. Operator: The next question is coming from Joseph Giordano of TD Cowen. Joseph Giordano: This is Chris on for Joe. So this is the first time that Cognex has issued full year guidance alongside 2Q results. What has changed in the outlook that gives you confidence and visibility to provide the full year at this stage? Dennis Fehr: See, I mean, on the one side, and Matt talked about it, we see really strong demand across most of our end markets, and it has led us to increase the outlook for these end markets. So there's clearly like strong conviction in the demand environment. At the same time, I really want to emphasize that there's still a short-cycle low visibility company in that sense. That means typically like a 3 to 4 months type of visibility. So we would not be a company issuing full year guidance at the end of the prior year or the beginning of the year. So we need to have really good visibility into the second half of this year. And that also means that we are not yet seeing everything into Q4, right? So we have a good view into -- a good portion of the remaining 5 months, but not into the full part of the full year. And that means like year-end demand, right? So we believe considering the demand environment where we are, it will be a strong year-end demand. But we haven't baked a lag in an exceptional year-end demand. And then certainly, there's still also uncertainties still around memory prices, for example, how these will develop in that regard. There are still some uncertainties out there. But nevertheless, we felt as part of our efforts over the last 1.5 years to enhance investor communications and being as transparent and forthcoming as we are, we felt like that we want to provide that view if we are able to. And so in that regard, we felt confident enough to put out this guide, while we may not know everything at this moment. Joseph Giordano: And we spoke about data center on the call. Could you help us put a framework around sizing that opportunity perhaps relative to some of your other end markets and maybe provide some color on how meaningful you anticipate data center-related revenue could become? Matt Moschner: Yes, Chris, I think we're not prepared necessarily to do a full sizing on full potential. We're in the process of that. As I said before, it's still a very nascent opportunity. And I think many years of future growth ahead of us. We're sizing it today as low single digits of revenue with a growth path right now of 30%. And so you can kind of extrapolate that, whether that accelerates or decelerates, we're not prepared to say full potential. But again, I think it's an application area, and it's a market that really plays to a lot of the advantages we have. and where we've created value for customers in the past, right? The cost of poor quality is extremely high, right? These racks are tens of millions of dollars and the cost of downtime is enormous when they're not generating results and tokens. So that's great. The demand to roll them out quickly and scale quickly is high. And so that places a strain on the production capacity up in the supply chain, and that's certainly an area where we help with automated inspections during the manufacturing process. And then a lot of the component suppliers are Cognex customers already and very familiar with vision and how to apply vision to their own quality inspection process. So we're very optimistic that the technology we have and the value we typically provide is very well positioned for this market. But as we get a better sense for the full potential, we will be updating you on future calls. Operator: The next question is coming from Jacob Levinson of Melius Research. Jacob Levinson: Just expanding on electronics here, I think the expectation is that given all these memory price increases that the actual volumes in consumer electronics are going to slow from here. So how do you balance that with some of this new data center business you talked about and your own efforts of new products and the sales force changes and your customers' CapEx plans. I'll leave it at that, but it seems like it's -- there's some nuance there. Matt Moschner: Yes. Thanks, Jake. Yes. No, it's certainly a risk we're thinking about, but I would say it's not one we're really seeing evidence of playing out in the business today, meaning higher memory prices putting downward pressure on demand for automation with our electronics customers. So it's a risk. I would say it's not one that we're seeing manifest yet in the business. Demand remains strong, but that certainly could change. And then I would say our growth plan and strategy in electronics is multifaceted, right? It's not just about consumer demand and line counts. That's certainly a component. But there -- as we've talked about before, there continue to be shifts in the geographic locations of supply chains out of China to the broader ASEAN region in India, and we expect that to continue, and that's a tailwind for growth. Our own technology developments are letting us penetrate further into applications primarily in 2D inspection. We expect that to continue. And then we are broadening our customer base in this area. As on one hand, there are new entrants to consumer devices that are looking to embed the latest generation of AI technology through consumer hardware. And you can imagine Cognex would be supporting those efforts. So our growth in electronics and then on top of the data centers, as you mentioned. So our growth in this area is multifaceted. I think to the extent that memory prices put downward pressure on consumer demand, certainly could happen. I wouldn't say we're seeing it yet. And if it does, there's other tools that we would exercise to try to overcome that headwind should it arrive. Dennis Fehr: And maybe to add to that, right, I think historically, certainly end user demand and volume throughput for our customers is a factor, but it's not the largest factor in terms of our electronics demand, right? I think about that changes in production are a big factor as well in terms of new form factors, new device types, shift in supply chain locations, adoption of latest technologies. That's probably the much bigger factor, which drives our demand in consumer electronics. In that regard, I just want to also make sure that you're not over-indexing just on the end user demand. Jacob Levinson: Okay. That's helpful. And just on the -- on some of these new AI featured products, if you will, you've had certainly a big uptick in these new product introductions. I think there's always been this promise that the capability and the cost of those products was going to bring that to a level that broaden your TAM pretty considerably, especially with some of those customers that maybe don't have the expertise in-house to adopt the older technology. Just trying to get a sense of what kind of uptake you've seen. And I know you talked about packaging as an example of market, but just trying to get a sense of what kind of uptake you've seen with these products in some of these markets you haven't traditionally been as large in. Matt Moschner: Yes. absolutely. I think, Jake, just to be clear, your question is about as we've been able to roll out AI, more powerful tools into our products, how has that driven penetration? Is that right? -- in the end markets? Yes, yes. Great. Great. Yes. No, for sure. I mean, I would say in all of our 5 verticals, it's been helpful. But most notably, I think you rightly point out in packaging, right? These are historically very difficult areas to perform vision given the high variability of packaging designs. And so our latest generation of tools, whether it's classifying, defect detecting, segmenting, doing optical character recognition, we have great AI-based tools in all those areas and very well positioned for packaging applications. So for sure, that's an area where we're driving penetration of vision. We've talked about logistics in the past, where today, our logistics business is still primarily traceability, which is reading barcodes to track items through fulfillment centers. SLX, which was the product that enabled vision for logistics last year, seeing great traction. And again, all those tools are fully AI-based, couldn't solve the problem without that technology. Consumer electronics, very difficult inspections on -- you can think of fully populated PCBAs, where you're looking for small parts, very densely populated on a board, looking for missing parts, broken sider joints, again, perfect application for AI that we're deploying. Semiconductor, right, very, very difficult surfaces, right, shiny metallic even silicon wafers. And again, AI is very good at finding defects, scratches, dents, other things that those wafers are being handled and processed. So quite frankly, I think our AI progress on the inspection side is quite broad. Now the one area I didn't mention was automotive. But there, I think we're -- automotive, as we've said in the past, is probably our heavily -- most heavily penetrated market today with automation, but still opportunities there, too, maybe on a smaller scale. So yes, I wish I could say it was one area in particular, it is quite broad-based. And the uptake on the new products has been strong. These are leading technologies solving novel applications, in many cases, first of their kind. And so we're seeing strong demand, strong pricing that is commensurate to the ROIs that those problems have. So hopefully, that's helpful, Jake. Operator: The next question is coming from Guy Hardwick of Barclays. Guy Drummond Hardwick: Congratulations on excellent results. So Dennis, on the guidance, thanks for giving us the full year guidance, but obviously it means we can back out what's implied for Q4. It looks like the step down at the midpoint would be 13% organically Q4 versus Q3. It's been quite a long time since Cognex has had a double-digit step down. Is it fair to suggest that Q3 guidance reflects exceptional demand that you referenced, but Q4 doesn't. And therefore, it appears to have quite a bigger step down than perhaps it should have? Or is this something -- or are you just baking in conservatism into your guidance there? Dennis Fehr: I would say this year is a year where you see strong growth in electronics, of course, also some of the other verticals like semi packaging. But nevertheless, electronics is a strong growth driver and that drives more seasonality, right? So that means in years where you have stronger electronics growth, you would expect then also a stronger seasonality effect. So in that regard, that's one of the factors here. I would say I look at a bit also like first half, second half, right? So if you look at implied revenue for the second half, that's $580 million versus the $560 million in the first half of the year. So you see actually an increase of the second half revenue and then you have effects, right? I had some electronic shift into the first half, you have a stronger effect of the portfolio optimization in the second half of the year. So if you would adjust for that, probably that growth from the first half into the second half is even more than the $20 million, probably more towards the $40 million. In that regard, I think in general, we feel like we see that demand momentum continuing. The only thing I would maybe otherwise point out is that certainly Q4 last year is comparatively the strongest comp, which we have as that was the first quarter where we saw a much more favorable demand environment. But yes, I think in general, we feel good about the demand environment. Guy Drummond Hardwick: And just as a follow-up, I understand that Cognex put in a price increase, I believe, in April. Does that gather momentum through the year? And how does that potentially impact gross margins? Dennis Fehr: So in general, we are pleased with the pricing progress which we're making, right? If you think back, 2024 was a year where we had pricing headwinds impacting gross margins. Now '25 was a neutral year. I would say in the first half of this year, pricing was a net positive on gross margin, not one of the largest factors, right? So we haven't called it out. Now for the second half of the year, as I alluded before, memory price impacts are negative in the second half of the year. But again, it's just more a timing effect that might we see memory price increases, we reacted to it with price increases by ourselves. We see good traction with that. But probably memory prices increased further, probably a bit more than what we had baked into our first round of price increases. So we'll adjust for that and we'll add to that accordingly. So in general, I think we will probably still end 2026 with a net positive on pricing. And that's clearly, if you think back about the bigger picture on '24 being a headwind neutral '25 and net positive in '26 despite the memory price headwind. I think we are quite pleased about the pricing progress which we are making. Operator: The next question is coming from Jairam Nathan of Daiwa Securities. Jairam Nathan: So I just wanted to ask you a question on strategy. Cognex has generally tried to focus more on online high-speed kind of applications. And based on at least there's a picture in the slide for racks, server racks, it seems like this could be a little of a shift. And I'm not saying this bad, but I'm just wondering if that is the case internally and if that could open even more applications. Matt Moschner: Yes. No, thanks. For sure. I mean one of the advantages that we have with our technology is very accurate inspections, but at line speeds, right, doing -- performing those inspections at subsecond, in some cases, sub-100 millisecond cycle times, which is which is and will continue to be a focus area for Cognex. But continuous flow manufacturing is one thing, right, where you have parts that are flying by, whether it be a bottling plant or a logistics conveyor. But I think what we tried to convey in the image for the data centers is also somehow a continuous manufacturing line where what you typically see is discrete stations of assembly, but those stations still have pretty high demand on cycle times. Now those cycle times tend to be seconds or minutes, but it is, I would still consider it somehow a continuous flow manufacturing operation. Now what we're seeing is automation in that manufacturing process. What was a lot of manual labor potentially transitioning to more robotic-oriented assembly. And so we're putting a lot of investment in terms of how do we have our vision systems work more natively with the leading providers of robotic manipulation. And I think you're seeing that get deployed in the manufacturing process of data centers, but also many other things. So Jairam, I wouldn't say it's really a departure from where we focused, which, as you rightly point out, is in-line manufacturing. But the types of that in-line manufacturing can be variable from continuous flow to more station-based manufacturing, which we would have featured in the data center example. Did that help? Jairam Nathan: So just if I could ask Dennis a question on pricing. So given the constant changes with supply chains and commodity costs, some of the companies seem to be going for dynamic pricing where they don't kind of -- the pricing is kind of increased more regularly. Is that something Cognex would consider just to offset some of these inflations? Dennis Fehr: I mean, yes, I would say dynamic pricing sounds to me like in ticket selling where you would really do like whatever -- every minute of price adjustment. So it's probably not as much as we are pushing it. But clearly, in an inflationary environment, which we are in, at least what we think from a supply chain perspective, thinking about more frequent price adjusting is clearly a strategy. But Certainly, at the same time, right, there is a sales cycle and you don't want to disrupt also the sales cycle with too many price increases throughout that time. In that regard, there might be an opportunity here to think about price increases, which are aligning with the sales cycle of a few months. But like every few weeks, price adjustments or every day a price adjustment is probably not helpful in the sales cycle either in that regard. Small opportunity perhaps, but not a major shift. Matt Moschner: Yes. I would also say Cognex captures value through price based on the value created in each of those applications. And the variety of applications that we solve is very, very high. And so on one hand, when we say we're working on our pricing initiatives, it's not just about list price increases. It's also about how we're equipping our sales force with better tools to quantify the value and how we plan to capture that value. And so it's more like pricing execution. So keep that in mind as well. It's not just about continuous list price increases. It's also about how do we better quantify, how do we better articulate and capture the value that our products are creating in an extremely highly variable set of applications. Operator: The next question is coming from Amit Mehta of UBS. Amit Mehrotra: This is Satap on for Amit Mehrotra. So I wanted to discuss on the sales growth, like you have been delivering very strong growth, and it has been consistent across most of the end markets. So can you help us break it down like what is driving this in terms of share gains and expansion into newer markets versus the underlying market demand? And in addition to this, like ISM and other macro indicators have been supportive as well. But do you see the scope for underlying market demand to continue to improve from here? Matt Moschner: Yes. Thanks for the question. It's always hard to piece out how much of our growth is market forces versus the quality of our own execution. I think it's a healthy portion of both. I mean, on one hand, -- the demand environment is strong as marked by our seventh month of PMIs, Purchasing Manager Index in expansion territory. And I think Cognex continues to be well aligned with sort of the secular growth trends of automation, scarcity of labor, rising input costs, higher emphasis on product quality. I mean those things remain. And so you put those together, and yes, it drives strong demand for automation and particularly machine vision and Cognex being the leader. But on the same token, I think we are executing very well. We've talked about our sales force transformation over the last several months. And that's really a couple of things. One, we did a lot of work on the organization of our sales force to make sure that they were organized for success, process and tools, making sure that they had leads, that they had -- we are fully leveraging our CRM systems that we've invested in. And then, of course, there's always the investments we've made in product. We've had great new product introductions over the last 18 months, 4 in 2025 and maybe our biggest set of launches in April of this year on the AI side. And so yes, I think you put those things together, I think our team is executing really well. And really the strongest evidence is in the new customer adds that we continue to drive. And at the same time, as I mentioned previously, new customer adds is one thing. We're also spending a lot more time thinking about, I said in the structured remarks, land and expand, what are the potential at the accounts that we already serve and how do we expand our share. And so there, we've invested to get better data, and we'll be tracking that more rigorously internally. So yes, I think it's a strong demand environment. I think we expect that, that could persist into 2027. It's still too early to call. but we are continuing to drive internal growth initiatives, and those are paying off really strongly as well. Amit Mehrotra: That is very helpful. Just as a follow-up on that, on the semiconductor market, the growth rate has been very strong. The underlying demand seems very good. So as we look ahead maybe over the next 1 to 2 years, do you believe these levels of demand are sustainable? Are you getting a little bit higher visibility in this market than what you have in the prior cycles? Matt Moschner: Yes, thank you. Couldn't be happier with the performance of our semi business. This is a market that Cognex has been in for decades. And what that really means is the strength of the relationships that we have with leading semi machine builders and OEMs that deliver the capabilities to upstream and downstream producers of chipsets. So yes, and it's an area that in the last several years, we've been investing in new technologies, whether it be traceability, barcode reading, inspections. And so -- and then the acquisition of Moritex in 2023, Moritex as a business was heavily indexed more to semi OEMs selling advanced optics and lighting. And so I think you put all that together, I feel like we're very well positioned to continue to capitalize on the growth momentum that we see in semiconductor. For sure, I'd say this cycle feels different, perhaps more durable than previous semi cycles. I could imagine how that would extend well into next year and beyond. I think that's really predicated on the continued levels of investment in AI infrastructure. And should that continue, I would fully expect that, that would flow through to strong demand for Cognex products as we work with our large semi OEM partners. Dennis Fehr: Maybe as we got the memory and semi question across now different end markets and different themes, maybe to summarize it. So there are clearly puts and takes, right? I think on the one side, clearly, memory cost was first a headwind for us on the cost side. We feel confident that we can offset that through pricing, taking out some of the timing effects, and we had the notion of potential demand impact on electronics, which could happen. And we also said at the same time, end user demand is only one factor which drives our electronics demand. And then at the same time, right, we have the positives, which is very clearly visible in the semi business. As Matt just outlined, we have a positive in the electronics business in the data center market. So in general, I really want to emphasize that the environment for us is really net very favorable for us, and it's not a net headwind for us. In general, we're actually quite positive about what we see in this -- from these trends. Operator: Thank you. This brings us to the end of today's conference. I would like to turn the floor back over to Matt Mosher for closing comments. Matt Moschner: Great. Thank you for joining us this morning and for your continued support. We look forward to updating you on our progress in the third quarter. Operator: Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines and log off the webcast at this time, and enjoy the rest of your day. Before you buy stock in Cognex, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Cognex wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Cognex. The Motley Fool has a disclosure policy. Cognex (CGNX) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Cognex Corporation CGNX used its second-quarter 2026 earnings call to emphasize that growth is coming from both an improving industrial cycle and a broader strategic push into AI-enabled machine vision, new customers and new end markets. Management highlighted the data center supply chain as an emerging opportunity, while stronger semiconductor, electronics, packaging and logistics demand supported a more confident second-half outlook. President and CEO Matt Moschner said that data center revenues remain a low single-digit percentage of company sales but are growing more than 30% year over year. Moschner said that Cognex is seeing demand across component manufacturing, server and rack assembly and eventually deployment and maintenance. Most current revenues are still tied to quality assurance and visual inspection of components. In Q&A, a Goldman Sachs analyst asked what is driving the opportunity. Moschner said that aggressive AI-oriented data center construction is increasing inspection needs, while newer technologies such as OneVision allow Cognex to address complex applications that were harder to solve previously. Moschner said that hundreds of customers are already using OneVision, Cognex's cloud-based AI training platform, to reduce deployment complexity and accelerate machine vision applications. Moschner also pointed to new In-Sight products spanning entry-level inspection, advanced 3D vision and more complex applications, all within the same software environment. A JPMorgan analyst asked which demonstrations were generating the strongest customer reaction. Moschner said that complex 2D inspection applications, including printed circuit boards and server-related components, stood out because AI tools can identify defects that conventional approaches struggled to address. Moschner said that Cognex added about 4,500 new customers year to date after adding roughly 9,000 in 2025. The next phase is a land-and-expand approach focused on identifying higher-potential accounts and increasing share of wallet. Moschner said that packaging continues to contribute disproportionately to customer additions, while Cognex is also revitalizing relationships with systems integrators, machine builders, resellers and services partners. Moschner raised the full-year outlook for logistics to high single-digit growth and expects double-digit growth in packaging, electronics and semiconductors. Automotive remains the exception, with a flat to low single-digit growth outlook. CFO Dennis Fehr said that adjusted EBITDA margin reached 32.2%, up 1,150 basis points year over year, while adjusted operating expenses fell 5% in constant currency. Fehr said that Cognex now expects about $35 million of annualized net cost reductions by year-end 2026. He added that the focus is shifting from direct cost reduction toward productivity improvements that allow the company to grow with largely existing resources. Adjusted earnings per share (EPS) of $0.45 topped the Zacks Consensus Estimate of $0.42, while reported revenues of $291.3 million missed the consensus estimate of $293.2 million. Cognex Corporation price-consensus-eps-surprise-chart | Cognex Corporation Quote Fehr guided Q3 revenues to $300 million to $320 million, adjusted EBITDA margin to 32% to 35% and adjusted EPS to $0.50 to $0.54. For 2026, Fehr said that Cognex expects revenues of $1.13 billion to $1.15 billion, adjusted EBITDA margin of 29% to 31% and adjusted EPS of $1.64 to $1.68. Fehr said that memory prices are likely to create roughly 75 basis points of gross-margin headwind in the third quarter, with some pressure potentially continuing into the fourth quarter. He expects pricing actions to offset that effect over time, while favorable mix should remain supportive but less pronounced than in the first half. Moschner framed the strategy around technology leadership, customer experience and diversification, with AI-enabled inspection opening applications across data centers, packaging, electronics and semiconductors. Fehr kept operating leverage equally prominent. Management's second-half priorities center on sustaining demand momentum, broadening the customer base, improving channel productivity and protecting margins as input costs rise. CGNX currently carries a Zacks Rank #2 (Buy). Its Growth Score is A, while its Value Score and Momentum Score are F and its VGM Score is D. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The favorable Zacks Rank points to a stronger near-term ranking, while the Style Scores present a mixed profile. The Growth Score is the strongest individual signal, but the weaker Value, Momentum and VGM readings reduce the strength of the combined style picture. The Zacks Rank can change as analysts revise estimates after the just-reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cognex Corporation (CGNX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Cognex Corporation (CGNX) came out with quarterly earnings of $0.45 per share, beating the Zacks Consensus Estimate of $0.42 per share. This compares to earnings of $0.25 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +7.14%. A quarter ago, it was expected that this company would post earnings of $0.25 per share when it actually produced earnings of $0.34, delivering a surprise of +36%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Cognex, which belongs to the Zacks Electronics - Testing Equipment industry, posted revenues of $291.26 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.67%. This compares to year-ago revenues of $249.09 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Cognex shares have added about 98.8% since the beginning of the year versus the S&P 500's gain of 13%. While Cognex has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Cognex was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.37 on $280.33 million in revenues for the coming quarter and $1.48 on $1.11 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Testing Equipment is currently in the top 10% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the broader Zacks Computer and Technology sector, Telos Corporation (TLS), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This company is expected to post quarterly earnings of $0.02 per share in its upcoming report, which represents a year-over-year change of +166.7%. The consensus EPS estimate for the quarter has been revised 4.8% higher over the last 30 days to the current level. Telos Corporation's revenues are expected to be $45.24 million, up 25.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cognex Corporation (CGNX) : Free Stock Analysis Report Telos Corporation (TLS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Cognex Corporation? Here are five stocks we like better. Record Q2 performance: Revenue rose 17% year over year, while adjusted EBITDA increased 81% to $94 million and adjusted EPS grew 80% to $0.45. Strong demand in semiconductors, electronics, packaging and logistics, combined with cost reductions and favorable mix, drove margin expansion. Positive outlook: Cognex expects Q3 revenue of $300 million to $320 million and maintained full-year guidance for $1.13 billion to $1.15 billion in revenue, with adjusted EPS of $1.64 to $1.68. Management cited improving industrial conditions and rising adoption of automation and AI-enabled machine vision. Growth and risks: Data-center-related revenue is growing more than 30% annually, while the OneVision AI platform has attracted hundreds of customers. Higher memory prices are expected to pressure Q3 gross margin by about 75 basis points, though Cognex expects pricing actions to limit the longer-term impact. Prepare for the Next Wave of Factory Automation With These 3 Standout Names Cognex (NASDAQ:CGNX) reported record second-quarter revenue as demand across semiconductor, electronics, packaging and logistics supported growth, while cost reductions and favorable mix drove substantial margin expansion. CEO Matt Moschner said the company did not see a material negative effect from macroeconomic or geopolitical developments during the quarter. He said Cognex is benefiting from an improving industrial cycle as well as increased adoption of automation and AI-enabled machine vision. → 3 Drone Stocks That Should Soar After the Summer Slump Analysts Are Bullish on These 3 Laser Tech Companies “Our performance reflects more than cyclical recovery,” Moschner said, pointing to execution on the company’s growth, diversification and operating-discipline initiatives. Revenue increased 17% year over year, or 16% on a constant-currency basis, reaching a record quarterly level. Adjusted EBITDA totaled $94 million, up 81% from a year earlier and the company’s highest level since the second quarter of 2021. Adjusted EBITDA margin rose 1,150 basis points year over year to 32.2%. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth 3 Underrated Robotics Stocks Poised for Major Growth Adjusted diluted earnings per share increased 80% to $0.45. Cognex generated $68 million in free cash flow during the quarter, compared with $40 million a year earlier. Over the trailing 12 months, free cash flow was $268 million and conversion was 114%, above the company’s target of more than 100%. CFO Dennis Fehr said the company returned nearly 80% of its trailing-12-month free cash flow to shareholders through dividends and share repurchases. China revenue rose 42% year over year on a constant-currency basis, led by semiconductor and electronics demand. Americas revenue increased 27%, though the region benefited partly from electronics customers placing orders through U.S.-based entities rather than European entities. Excluding that procurement change, Americas revenue still rose at a double-digit rate. Europe revenue fell 15%; excluding the procurement change, it declined at a low-single-digit rate. Automotive weakness was partly offset by semiconductor strength. Other Asia revenue increased 14%, driven primarily by semiconductor demand. → Jersey Mike's Serves Fresh Gains After IPO Stumble For the third quarter, Cognex expects revenue of $300 million to $320 million, representing roughly 12% year-over-year growth at the midpoint. Excluding a $13 million one-time commercial partnership benefit recorded in the third quarter of 2025, the midpoint implies 17% growth. The company forecast adjusted EBITDA margin of 32% to 35% and adjusted EPS of $0.50 to $0.54. For the full year, Cognex issued guidance for revenue of $1.13 billion to $1.15 billion, approximately 15% growth at the midpoint, and adjusted EBITDA margin of 29% to 31%. It projected adjusted EPS of $1.64 to $1.68, while noting that the outlook includes about $0.11 per share of investment income. Adjusted gross margin increased 350 basis points to 71.5%, aided by favorable mix and volume. Fehr said tariff refunds were not a material factor in the gross-margin performance. Adjusted operating expenses declined 3% year over year, or 5% in constant currency, as the company accelerated cost-reduction actions. Cognex now expects roughly $35 million in annualized net cost reductions by the end of 2026, near the lower end of its prior $35 million to $40 million range. Fehr said the company expects operating expenses to remain below year-earlier levels in the second half and below first-half levels, although it is increasingly shifting its focus from cost reduction to productivity improvements. The company expects higher memory prices to create approximately a 75-basis-point gross-margin headwind in the third quarter, with some impact potentially continuing into the fourth quarter. Fehr said Cognex is responding through pricing and expects the effect to be more of a timing issue than a medium-term margin pressure. Moschner said Cognex’s OneVision platform is now generally available, with hundreds of customers using it to reduce deployment complexity and scale AI-based vision applications. The company also highlighted additions to its In-Sight product portfolio, including the In-Sight 2800, L38, 3900 and 6900 systems. The company added approximately 9,000 customers in 2025 and another 4,500 customers year to date in 2026. Moschner said Cognex is increasingly focused on a “land and expand” approach, seeking to identify higher-potential accounts among newer customers and increase its share of customer spending over time. He also said the company is strengthening coordination with systems integrators, machine builders, resellers and service partners to broaden its market reach. Data center supply chains were a key area of discussion. The market currently represents a low-single-digit percentage of Cognex revenue but is growing more than 30% year over year, according to Moschner. Current activity is primarily tied to visual inspection and quality assurance for components such as connectors, circuit boards, metal parts and enclosures, with activity beginning to extend to server assembly. Moschner said AI-enabled products are helping address complex inspection work that may previously have been difficult to automate, including printed circuit board assembly, packaging, semiconductor surfaces and server-rack assembly applications. Cognex raised its full-year outlook for logistics to high-single-digit growth, packaging to double-digit growth, electronics to double-digit growth and semiconductor to double-digit growth. Logistics recorded its 10th consecutive quarter of double-digit growth, supported by large e-commerce customers. Packaging grew at a double-digit rate excluding the divestiture of a Japan-focused trading business. Electronics growth was also double digit across customers and geographies. Semiconductor revenue grew strongly across all geographies, supported by AI infrastructure investment. Automotive revenue declined at a high-single-digit rate in the quarter but was nearly flat year to date. Growth in Asia and the Americas was offset by continued European weakness. Cognex maintained its full-year automotive outlook of flat to low-double-digit growth. Management said it continues to monitor risks including memory-market conditions, inflation and broader macroeconomic and geopolitical developments, but said improved visibility into the second half supported its decision to provide full-year guidance. Cognex Corporation is a leading provider of machine vision systems, software, sensors and industrial barcode readers used to automate manufacturing, logistics and distribution processes. The company designs and develops vision-based products that help manufacturers and logistics operators inspect, identify and guide parts, assemblies and packaged goods in real time. Its solutions are applied in a broad range of industries, including automotive, electronics, semiconductor, pharmaceutical, food and beverage, and general manufacturing. The company's product portfolio includes stand-alone vision systems, vision sensors and deep learning-based software platforms that enable automated inspection, quality control and traceability. 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 [email protected]. The article "Cognex Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Revenue: Record quarterly revenue, up 17% year over year (16% in constant currency). Adjusted Gross Margin: Expanded 350 basis points to 71.5%. Adjusted EBITDA Margin: 32.2%, expanding 1,150 basis points year over year. Adjusted EPS: Increased 80% year over year to $0.45. Free Cash Flow: $68 million in the quarter, up approximately 70% year over year; trailing 12-month conversion rate of 114%. Adjusted Operating Expenses: Declined 3% year over year (5% in constant currency). Logistics Revenue: Tenth consecutive quarter of double-digit growth. Electronics Revenue: Double-digit growth. Semiconductor Revenue: Strong double-digit growth across all geographies. Automotive Revenue: Declined high single digits in the quarter. China Revenue: Increased 42% year over year in constant currency. Americas Revenue: Grew 27% year over year. Europe Revenue: Declined 15% year over year. Other Asia Revenue: Grew 14% year over year. Warning! GuruFocus has detected 9 Warning Signs with CGNX. Is CGNX fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record quarterly revenue and strong double-digit adjusted EPS growth in Q2 2026. Adjusted EBITDA margin expanded 1,150 basis points year-over-year to 32.2%, marking the eighth consecutive quarter of margin expansion. Strong demand across multiple end markets, with logistics, packaging, electronics, and semiconductor all expected to grow double digits in 2026. Data center supply chain market growing over 30% year-over-year, presenting a new high-growth opportunity. Successful execution of cost reduction initiatives, with approximately $35 million in annualized net cost reductions expected by end of 2026. Automotive revenue declined high single digits in Q2, with continued weakness in Europe. Memory price increases are expected to create a gross margin headwind of about 75 basis points in Q3 2026. Europe revenue declined 15% in Q2, partly due to a procurement change, but still showed low single-digit decline excluding that effect. Full-year guidance implies a sequential revenue decline in Q4, reflecting seasonality and portfolio exits. The company faces uncertainty from macroeconomic and geopolitical risks, including memory market conditions and inflationary pressures. Q: Can you expand on the data center opportunity and what is creating the opportunity for Cognex now?A: Matt Moschner (CEO): We've served the data center market for years, but it was a smaller portion of the business focused on drive removal. The change is the aggressive build-out of high-tech AI facilities placing demands on the supply chain. The opportunity spans three areas: manufacturing componentry, assembling those into racks, and deployment/maintenance. Currently, most revenue (low single digits, growing ~30%) comes from quality assurance and visual inspection of componentry like connectors, PCBs, and metal enclosures. We are still early in the growth wave, and these complex inspections are well-suited for AI technologies like OneVision, which we couldn't have solved a couple of years ago. Q: Is the expectation for OpEx to remain down on a year-over-year basis through the second half of the year?A: Dennis Fehr (CFO): Yes, absolutely. This is in line with our $35 million net cost reduction target. We saw OpEx decline 5% in constant currency in Q2, and we expect smaller step-downs into Q3 and Q4. We definitely expect OpEx to stay well below prior year levels and also below the first half in the second half. This is part of the strength in our leverage, evidenced by 100% revenue flow-through in Q2 and 87% at the midpoint for the full year. Q: What demos at the Automate Show generated the strongest customer reactions, and how is that translating into the pipeline?A: Matt Moschner (CEO): The mood was one of urgency, as automation is now table stakes. The head-turners were our 2D inspection demos using the latest AI tools on new embedded systems (In-Sight 3900 and 6900). We showed complex PCBA inspections for server boards, which was very well received, and a demo on the 6900 that could pick up nuanced defects on highly variable pieces of art with no incremental training. This is where our AI advantage is most pronounced. Q: Can you talk about the current environment for margin expansion, lead times, and supply chain inventories? Are there bottlenecks or margin impacts expected in the second half?A: Dennis Fehr (CFO): Gross margin in Q2 was strong due to favorable mix. However, we are seeing memory price headwinds increase further. We now expect about 75 basis points of gross margin headwind in Q3, with some possibly carrying into Q4. We expect to fully offset this through pricing by 2027, so it's a timing impact. Mix should remain favorable in the second half but not as strong as the first half. We can still show strong bottom-line performance through OpEx efficiencies. Q: What KPIs can you share on the progress of adding new customers, and do you need to continue hiring new sales folks?A: Matt Moschner (CEO): We are very happy with the progress, adding ~4,500 new customers year-to-date. As we acquire customers, we are shifting focus to a "land and expand" strategy to capture more share of wallet. Packaging is a strong area for customer adds. Our expectation is not to continue investing heavily in the direct sales channel; instead, we are revitalizing our channel partner program (systems integrators, machine builders) to drive productivity in our sales organization. Q: This is the first time Cognex has issued full-year guidance alongside Q2 results. What has changed to give you confidence to provide this?A: Dennis Fehr (CFO): We see strong demand across most end markets, leading us to raise our outlook. However, we are still a short-cycle, low-visibility company with about 3-4 months of visibility. We have good visibility into a good portion of the remaining five months but not the entire year-end demand. We haven't baked in an exceptional year-end demand. We felt confident enough to provide this view as part of our efforts to enhance investor communications. Q: Can you help us frame the size of the data center opportunity relative to other end markets?A: Matt Moschner (CEO): We are not prepared to do a full sizing as it's still nascent. It's currently low single digits of revenue with a 30% growth path. The cost of poor quality is extremely high (racks are tens of millions of dollars), and the demand to roll out quickly is high. Many component suppliers are already Cognex customers. We are very optimistic about our position, but we will update you on future calls as we get a better sense of the full potential. Q: Given memory price increases, how do you balance the expectation of slowing consumer electronics volumes with the new data center business and your own efforts?A: Matt Moschner (CEO): Higher memory prices putting downward pressure on demand is a risk, but not one we are seeing evidence of in the business today. Our growth plan in electronics is multifaceted, including shifts in supply chain geography, new technology penetration, and broadening our customer base with new entrants. Dennis Fehr (CFO) added that end-user demand is not the largest factor driving our electronics demand; changes in production, new form factors, and supply chain shifts are bigger factors. Q: What kind of uptake have you seen with the new AI-featured products in markets you haven't traditionally been large in?A: Matt Moschner (CEO): The AI progress on the inspection side is quite broad. In packaging, our latest AI tools are driving penetration in historically difficult applications. In logistics, we are seeing traction with vision beyond traceability. In consumer electronics, we are deploying AI for complex PCBA inspections. In semiconductor, AI is good at finding defects on difficult surfaces. The uptake on new products has been strong, with pricing commensurate to the ROIs. Q: The implied Q4 step-down is 13% organically. Is that reflecting exceptional Q3 demand and conservatism for Q4?A: Dennis Fehr (CFO): This year has strong growth in electronics, which drives more seasonality. Looking at first half vs. second half, implied revenue increases from $560 million to $580 million. Adjusting for the electronics shift into the first half and portfolio optimization in the second half, the growth is even more, probably towards $40 million. We feel good about the demand environment. Q4 last year is the strongest comp as it was the first quarter of a much more favorable demand environment. < For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Cognex CGNX reported second-quarter 2026 adjusted earnings of 45 cents per share, up 80% year over year and 7.14% above the Zacks Consensus Estimate. Revenues increased 17% to $291.26 million but missed the consensus mark by 0.67%. Broad-based end-market strength and favorable mix supported results, while Logistics delivered its 10th consecutive quarter of double-digit growth. Second-quarter revenues reached a quarterly record and increased 16% on a constant-currency basis. Growth was broad-based across most major end markets, with Factory Automation strength led by Electronics, Semiconductor and Packaging.Logistics, Packaging, Consumer Electronics and Semiconductor each posted double-digit revenue growth. Automotive revenues declined in the high-single-digit range, making it the main end-market weak spot during the quarter. The company recorded its eighth consecutive quarter of year-over-year revenue growth. Cognex Corporation price-consensus-eps-surprise-chart | Cognex Corporation Quote Cognex continued to pursue growth through customer, channel and end-market diversification. The company added roughly 4,500 customers in the first half of 2026 after adding about 9,000 in 2025, while also revitalizing its global channel partner program.The company is extending OneVision into the data center supply chain. Its server-rack inspection application addresses complex quality-control requirements and expands the platform beyond traditional factory automation. Hundreds of customers are using OneVision to accelerate the configuration and deployment of AI-powered vision applications. Gross margin expanded to 70.6% from 67.4% in the prior-year quarter. Adjusted gross margin increased 350 basis points to 71.5%, primarily benefiting from favorable mix and higher volume. Tariff refunds were not a material contributor.Adjusted EBITDA surged 81% to $93.7 million. Adjusted operating income increased to $89.3 million from $46.6 million, while adjusted operating margin expanded to 30.7% from 18.7%. Broad-based end-market strength and favorable product mix supported the results. Adjusted EBITDA margin expanded 1,150 basis points year over year to 32.2%, marking the eighth consecutive quarter of expansion. Operating expenses declined 3% year over year to $120.3 million. Adjusted operating expenses decreased 3% to $118.9 million and fell 5% on a constant-currency basis, reflecting disciplined cost management.Research, development and engineering expenses decreased to $32.4 million from $33.1 million. Selling, general and administrative expenses declined to $87.9 million from $91.3 million, supporting significant operating leverage. As of July 5, 2026, cash and cash equivalents were $303 million, up from $263 million as of Dec. 31, 2025. Cognex held $755 million in total cash and investments and had no debt.Net cash provided by operating activities was $69 million, compared with $43 million a year earlier. Free cash flow increased 70% to $68 million from $40 million in the prior-year quarter. For the third quarter of 2026, Cognex expects revenues of $300-$320 million. At the midpoint, this represents 12% growth from reported third-quarter 2025 revenues and 17% growth excluding the prior-year commercial partnership benefit. Adjusted EBITDA margin is projected between 32% and 35%, while adjusted earnings are expected in the range of 50-54 cents per share, implying 58% year-over-year growth at the midpoint.For full-year 2026, CGNX anticipates revenues to be in the range of $1.13-$1.15 billion, indicating 15% growth at the midpoint. Excluding the prior-year commercial partnership benefit, management expects revenues to increase 16%.The company projects an adjusted EBITDA margin of 29%-31%, compared with 21.5% in 2025. Adjusted earnings are forecast between $1.64 and $1.68 per share, representing 63% growth at the midpoint. Currently, Cognex carries a Zacks Rank #2 (Buy).Some other top-ranked stocks in the broader Zacks Computer and Technology sector include Kimball Electronics KE, NVIDIA NVDA and Inuvo INUV. Each stock currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Shares of Kimball Electronics have declined 3.9% in the year-to-date period. KE is set to report the fourth quarter of fiscal 2026 results on Aug. 12.Shares of NVIDIA have increased 18% in the year-to-date period. NVDA is slated to report second-quarter 2026 results on Aug. 26.Inuvo shares have declined 56% in the year-to-date period. INUV is set to report first-quarter fiscal 2027 results on Aug. 11. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cognex Corporation (CGNX) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Inuvo, Inc (INUV) : Free Stock Analysis Report Kimball Electronics, Inc. (KE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research