MKSI Q2 Earnings Beat Estimates, Revenues Increase Year Over Year

MKSI's Q2 Revenue Mix Strengthens

Product revenues, which accounted for 88.5% of total revenues, increased 30.2% year over year to $1.10 billion. The performance reflected stronger demand across the company’s semiconductor, electronics and packaging and specialty industrial businesses.

Services revenues totaled $144 million, representing 11.5% of revenues. The figure increased 15.2% from the year-ago quarter, supporting the company’s overall double-digit top-line expansion.

MKS' End Markets Post Broad Growth

Semiconductor revenues increased 28.2% year over year to $554 million and represented 44.4% of total revenues. Management highlighted accelerating AI-driven investment across semiconductor and advanced packaging applications, along with rapidly growing order volumes.

Electronics & Packaging revenues increased 43.2% to $381 million, contributing 30.5% of revenues. Specialty Industrial revenues rose 13.8% to $313 million and accounted for 25.1% of the quarterly total. The gains across each end market underscored the breadth of demand in the quarter.

MKSI's Operating Details

Gross margin expanded 100 basis points year over year to 47.6%. Non-GAAP operating income totaled $320 million, while the non-GAAP operating margin improved 480 basis points to 25.6%.

Non-GAAP operating expenses were $275 million compared with $251 million a year earlier.

Adjusted EBITDA climbed 49.2% year over year to $358 million. Adjusted EBITDA margin rose 390 basis points to 28.6%, reflecting stronger revenue and improved profitability. 

GAAP income from operations increased to $251 million from $135 million in the prior-year quarter. The operating margin expanded 620 basis points to 20.1%, benefiting from the higher revenue base and improved gross margin.

MKSI's Cash Flow and Balance Sheet

As of June 30, 2026, MKS had cash and cash equivalents of $611 million compared with $569 million as of March 31, 2026.

As of June 30, 2026, long-term debt totaled $2.54 billion.

Net cash provided by operating activities was $243 million in the second quarter, up 47.3% year over year. Capital expenditures totaled $55 million, resulting in free cash flow of $188 million compared with $136 million in the prior-year quarter.

MKS' Q3 Outlook Signals Momentum

For the third quarter of 2026, MKS expects revenues of $1.35 billion, plus or minus $40 million. Gross margin is projected to be 47%, plus or minus 1 percentage point, while non-GAAP operating expenses are expected to be $280 million, plus or minus $5 million.

The company forecasts non-GAAP earnings of $3.58 per share, plus or minus 31 cents. 

Adjusted EBITDA is expected to be $395 million, plus or minus $28 million. Management noted that the outlook reflects the current business environment, including U.S. import tariffs and retaliatory actions by other countries.

MKSI’s Zacks Rank & Other Stocks to Consider

MKSI currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Zacks Computer and Technology sector include Applied Materials AMAT, Inuvo INUV and Analog Devices ADI. Each stock carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Applied Materials shares have gained 107.9% in the year-to-date period. Applied Materials is set to report second-quarter 2026 results on Aug. 13.

Shares of Inuvo have plunged 56% in the year-to-date period. Inuvo is set to report the second-quarter 2026 results on Aug. 11.

Shares of Analog Devices have rallied 39.3% year to date. Analog Devices is slated to report fiscal third-quarter 2026 results on Aug. 19.

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