Testing Equipment
AOSL Q1 2025: Foreshadowing Consumer Weakness
This quarter, Alpha and Omega reported a beat in Q1, yet gross margins are contracting due to eroding average sales prices (ASPs). AOSL guided Q2 below consensus with further margin pressures for both gross and operating margin. The commentary implies a weak Q4, one that is weaker this year than it was last year, despite 2024 largely being an expected rebound year. Regarding AOSL’s partners, it seems that AMD’s beat on desktop is flowing through to AOSL, with management stating desktop helped offset laptop weakness. Although there is bound to be progress in the graphic cards and AI accelerator cards eventually, the emerging AI use case is less clear in this quarter as these both took “a pause before the next platform transition.”
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