Author: LBank Research Analyst: Steven\.fu
Date: 2026\-07\-28 Issue: No. 35
Disclaimer: This report is based on publicly available information and analysis and is intended solely for information and research discussion. It does not constitute investment advice, a securities recommendation, a trading instruction, or any guarantee of returns. The operating performance, valuations, market prices, and consensus expectations discussed herein may change over time. Readers should independently verify the data and make their own decisions.
This issue summarizes the latest quarterly results released after the US market close on July 27, 2026, by five technology companies: Cadence Design Systems (CDNS), Celestica (CLS), F5 (FFIV), Amkor Technology (AMKR), and Rambus (RMBS). Cadence, Celestica, Amkor, and Rambus reported calendar Q2 2026, while F5 reported FY2026 Q3 for the period ended June 30. The report uses each company's official fiscal-year and quarterly convention throughout. Each company is assessed independently across reported results, operating conditions, guidance, cash flow, valuation, and investment view. Every section addresses only that company's latest information and pricing conditions.
1. Key Conclusions
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Cadence: Operations continue to deliver at a high level, but investors still need to guard against valuation compression. Q2 revenue was $1.584B, up 24.2% year over year. Core EDA, IP, and System Design and Analysis grew 18%, more than 40%, and 37%, respectively, while non-GAAP operating margin rose to 45.5%. The company also raised its FY2026 revenue, non-GAAP EPS, and operating cash flow guidance, with no material weakening in order visibility or profit growth. However, the July 27 closing price of $338.61 represented approximately 41.8x full-year adjusted EPS, and the stock rose another roughly 3.5% after hours. Our moderately negative view concerns the stock's risk/reward rather than the quality of the business. At this valuation, merely meeting the new guidance may not be enough to drive further gains; a new margin of safety would require additional upside in orders, earnings, or cash flow.
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Celestica: Demand, execution, and guidance provide a complete positive validation. Our investment view is positive. Q2 revenue was $4.70B, up 62% year over year and approximately 5.6% above the top of prior guidance. Adjusted EPS of $2.54 was approximately 8.5% above the top of the prior range. Management raised FY2026 revenue, adjusted EPS, and FCF guidance by 7.9%, 11.3%, and 20%, respectively, and expects 2027 revenue growth to exceed the 65% anticipated for 2026. The approximately 8.1% after-hours gain was supported by both reported results and guidance. The next point to validate is whether large-scale expansion can convert steadily into per-share cash flow after higher working capital, purchase commitments, and capital expenditure.
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F5: Product growth has flowed through to earnings, cash flow, and full-year guidance. Our investment view is positive. FYQ3 revenue was $865M, up 10.9% year over year. Product revenue grew approximately 19%, including 32% growth in systems and 7% growth in software. Non-GAAP operating margin was 35.0%, and adjusted EPS rose 13.7% to $4.73. The company raised FY2026 revenue-growth guidance to 9%-10% and increased the EPS midpoint by approximately 5.3%. Simplified FCF for the first nine months was approximately $778M, providing solid cash support for reported earnings. Our view remains positive, but the next phase depends on whether system-refresh demand can persist and software growth can return to double digits.
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Amkor: The margin inflection has arrived, but cash returns have not yet been validated. Our investment view is negative. Q2 revenue was $1.898B, up 25.6% year over year. Gross margin improved from 12.0% to 16.8%, and EPS of $0.70 was well above the company's prior guidance of $0.42-$0.52. The midpoint of Q3 gross-margin guidance increased further to 19%. However, first-half operating cash flow was $382M and cash capital expenditure was $688M, leaving simplified FCF at negative $307M. The company also maintained its full-year capex plan of $2.5B-$3.0B. The approximately 7.8% after-hours decline suggests that the market now wants a clearer payback period for the expansion program. It is more appropriate to wait for an improvement in free cash flow than to extrapolate a single quarter's margin.
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Rambus: Revenue and product shipments continue to grow, but margin and valuation constrain the upside. Our investment view is negative. Q2 revenue was $207.4M, up 20.4% year over year. Product revenue and royalty revenue increased approximately 22.0% and 22.7%, respectively, while the midpoint of Q3 product-revenue guidance implies roughly 13.9% sequential growth. At the same time, GAAP operating margin fell from 37% to 35%, and non-GAAP operating margin declined from 46% to 45%. Based on the midpoint of Q3 adjusted EPS guidance annualized mechanically, the stock trades at approximately 30.7x earnings; the annualized simplified quarterly FCF yield is roughly 1.9%. Operations remain on an upward trend, but the current price demands strong product growth and margin recovery.
Each view above addresses only the company's own earnings delivery, cash returns, and current valuation conditions. After-hours prices use publicly available five-minute market data at a fixed time; liquidity and the next day's opening price may differ. This report compares actual results only with formal prior company guidance and does not use secondary-website estimates with unverifiable definitions or timestamps to manufacture beat/miss analysis.
2. Latest Earnings and Independent Investment Views
Cadence: Order Visibility and Margins Keep Improving, but the High Valuation Demands Continued Upside
Reported results. Cadence Q2 revenue was $1.584B, up 24.2% year over year. Core EDA revenue grew 18%, IP grew more than 40%, System Design and Analysis grew 37%, and verification hardware set another revenue record while adding 12 new customers. GAAP operating margin was 28.4%, while non-GAAP operating margin was 45.5%, up 2.7 percentage points year over year. Non-GAAP EPS was $2.11, approximately 1.4% above the top of the company's prior $1.97-$2.08 guidance range. Quarterly operating cash flow reached $635M, so revenue growth, margin expansion, and cash-flow improvement all moved in the same direction.
Operating conditions. Period-end backlog reached $8.1B, with $4.2B of RPO expected to be recognized over the next 12 months, providing substantial revenue visibility for the second half. Core software, IP, system analysis, and hardware all delivered double-digit growth, showing that expansion did not depend on a single product shipment. One point to watch is the roughly 17-percentage-point gap between GAAP and non-GAAP operating margins. Amortization of acquired intangibles, stock-based compensation, and integration expenses still affect the accounting earnings ultimately attributable to common shareholders. The company also completed a sizable acquisition in the first half, and incremental revenue and cost synergies will need to be validated through earnings and cash flow in subsequent quarters.
Guidance and cash flow. Cadence raised FY2026 revenue guidance from $6.125B-$6.225B to $6.26B-$6.34B, increasing the midpoint by approximately 2.0%. Non-GAAP EPS guidance increased from $7.85-$7.95 to $8.05-$8.15, a midpoint increase of approximately 2.5%, while the operating cash flow midpoint rose from $1.925B to approximately $2.0B. First-half operating cash flow was $991M and cash capex was approximately $101M, but net cash acquisition spending was roughly $2.10B. Period-end cash was $1.440B and long-term debt was $2.482B. Using approximately $2.0B of full-year operating cash flow and about $240M of capex yields simplified FCF of roughly $1.76B.
Investment view. Based on the July 27 closing price of $338.61 and the $8.10 midpoint of full-year non-GAAP EPS guidance, the stock trades at approximately 41.8x earnings. The simplified FCF yield is roughly 1.9%. This pricing requires core EDA to sustain mid-teens growth, IP, system analysis, and hardware to keep contributing incremental revenue, and acquisition integration to avoid dragging on margins. The company's operating quality remains excellent, but the stock has little tolerance for execution errors, leaving our current view negative. Existing shareholders can monitor further upside in backlog, 12-month RPO, and operating cash flow. New capital would be better deployed after valuation declines or after earnings and cash flow again exceed the new guidance materially.
Celestica: AI Platform Programs Ramp Sharply as Full-Year Revenue, Earnings, and Cash-Flow Guidance Rise Together
Reported results. Celestica Q2 revenue was $4.70B, up 62% year over year and $250M, or approximately 5.6%, above the top of its prior $4.30B-$4.45B guidance range. CCS revenue was $3.81B, up 84%, including approximately $1.90B of HPS revenue, up 58%. ATS revenue was $890M, up 8%. Adjusted operating margin increased from 7.4% to 8.2%, and adjusted EPS rose from $1.39 to $2.54, approximately 8.5% above the top of the prior $2.31-$2.34 range. Improvements in demand, component supply, and project execution together drove revenue beyond the company's prior range.
Operating conditions. HPS continues to benefit from AI and machine-learning compute programs and the ramp of 800G and 1.6T networking platforms. Platform design, engineering, procurement, and manufacturing create an extended chain of project revenue. Operating leverage is already visible in adjusted margin and per-share earnings, but GAAP EPS of $3.17 included an approximately $0.90-per-share positive fair-value effect from a total return swap and should not be extrapolated directly as sustainable earnings power. Rapid growth will also increase inventory, supply commitments, accounts receivable, and equipment needs, so order strength and cash conversion must be monitored together.
Guidance and cash flow. Celestica raised FY2026 revenue guidance from $19.0B to $20.5B, an increase of 7.9%; adjusted EPS guidance rose from $10.15 to $11.30, up 11.3%; and FCF guidance increased from $500M to $600M, up 20%. Q3 guidance calls for revenue of $5.25B-$5.55B, adjusted EPS of $2.88-$3.08, and an adjusted operating margin of approximately 8.4%. First-half operating cash flow was $767M, capex was $493M, and company-defined FCF was $285M. To achieve the $600M full-year target, the company still needs to generate at least approximately $315M in the second half.
Investment view. Based on the closing price and full-year adjusted EPS guidance, the stock trades at approximately 28.2x earnings. The $600M FCF outlook implies a rough yield of approximately 1.6%-1.7%. The valuation already requires high growth, but the quarter delivered material increases in revenue, earnings, and cash-flow guidance, while the target for 2027 revenue growth above 65% offers a further operating catalyst. Our current view is positive. The holding case should rest on sustained customer demand, stable supply of critical components, and continued improvement in adjusted operating margin. If revenue reaches guidance but FCF or margin fails to follow, the assessment of growth quality should be reduced promptly.
F5: The System-Refresh Cycle Keeps Delivering, While Service Renewals and Cash Conversion Improve Visibility
Reported results. F5 FY2026 Q3 revenue was $865M, up 10.9% year over year. Product revenue was $463M, up approximately 19%, including systems revenue of $240M, up 32%, and software revenue of $223M, up 7%. Service revenue was $402M, up 3%. GAAP gross margin increased 1.2 percentage points year over year to 82.2%; non-GAAP operating margin rose 0.7 percentage points to 35.0%; and non-GAAP EPS increased 13.7% to $4.73. Revenue grew faster than expenses, allowing the product recovery to translate into profit expansion.
Operating conditions. Systems continued to benefit from strong refresh demand, software remained in growth, and maintenance and support services provided a stable revenue base. Product revenue has now delivered double-digit growth for eight consecutive quarters, indicating that the improvement is not merely the result of one quarter's large hardware deliveries. Systems are growing materially faster than software, which raises short-term revenue elasticity but also means durability depends on whether the refresh cycle can extend and software subscriptions and licensing can take over as the next growth driver. The combination of deferred revenue, service renewals, and product revenue is the key indicator of operating stability.
Guidance and cash flow. F5 raised FY2026 revenue-growth guidance from 7%-8% to 9%-10%, increasing the midpoint by 2 percentage points. Non-GAAP EPS guidance increased from $16.25-$16.55 to $17.21-$17.33, raising the midpoint by approximately 5.3%. FYQ4 guidance calls for revenue of $870M-$890M and non-GAAP EPS of $4.14-$4.26. Operating cash flow for the first nine months was $841M. After deducting $63.71M of equipment investment, simplified FCF was approximately $778M. During the same period, the company repurchased approximately $501M of stock and ended the quarter with roughly $1.606B of cash, preserving balance-sheet flexibility for capital allocation.
Investment view. Based on the closing price and the midpoint of full-year EPS guidance, the P/E is approximately 23.6x. Annualizing first-nine-month FCF mechanically produces a rough yield of approximately 4.4%. The current price is not low, but the earnings increase is supported by cash flow, while the service business mitigates product-cycle volatility. Our investment view is positive. Existing positions can use FYQ4 guidance delivery, systems growth, and renewed software acceleration as holding conditions. If product growth falls back to single digits, software still cannot return to double digits, or deferred revenue becomes materially weaker than service revenue, expectations for future earnings growth should be reduced.
Amkor: Revenue and Gross Margin Improve Materially, but Expansion Returns Have Not Yet Reached Free Cash Flow
Reported results. Amkor Q2 revenue was $1.898B, up 25.6% year over year and $48M above the top of its prior $1.75B-$1.85B guidance range. Advanced Products revenue was $1.557B, up 26.8% and representing approximately 82% of group revenue. Communications, computing, automotive and industrial, and consumer represented 42%, 22%, 22%, and 14% of revenue, respectively. Gross margin improved from 12.0% a year earlier to 16.8%, 1.3 percentage points above the top of prior guidance. EPS of $0.70 was $0.18, or approximately 34.6%, above the top of the prior $0.52 range. Better utilization and product mix have produced clear profit leverage.
Operating conditions. The top ten customers represented 66% of revenue, down from 72% a year earlier, although large customer programs can still materially affect equipment utilization and quarterly earnings. Advanced packaging requires equipment purchases, process qualification, and production ramp before order revenue is recognized, so an income-statement inflection does not mean capital recovery is complete. Period-end capital-expenditure payables were approximately $621M, and future cash outlays may lag the recognition of this quarter's profits. Inventory, equipment depreciation, customer prepayments, and utilization need to be assessed together.
Guidance and cash flow. Q3 guidance calls for revenue of $1.9B-$2.1B, with a $2.0B midpoint implying approximately 5.4% sequential growth. Gross-margin guidance is 18%-20%, with a 19% midpoint, while EPS guidance is $0.67-$0.87, with a $0.77 midpoint. The company maintained its full-year capex plan of $2.5B-$3.0B. First-half operating cash flow was $382M, cash capex was $688M, and simplified FCF was negative $307M. Q2 EBITDA was approximately $400M; even when annualized mechanically, full-year capex still equals approximately 156%-188% of that amount.
Investment view. Q2 revenue, gross margin, and EPS all materially exceeded the company's prior guidance, demonstrating that the expansion program is entering a phase of profit delivery. The after-hours decline does not negate the operating improvement; it reflects investors demanding a clearer capital-payback period. Our current view is negative, mainly because free cash flow remains negative, full-year capex is high, and there is a timing gap between equipment deployment and customer orders. A more constructive investment case would require Q3 gross margin near 19%, a material increase in second-half operating cash flow, and full-year simplified FCF approaching breakeven. If profit continues to rise without cash-flow improvement, position sizing should remain disciplined.
Rambus: Memory-Interface Products Sustain Growth, but Margin Recovery Will Determine Whether Valuation Holds
Reported results. Rambus Q2 revenue was $207.4M, up 20.4% year over year and $9.4M, or approximately 4.7%, above the top of the company's prior $192M-$198M guidance range. Product revenue was $99.2M, up approximately 22.0%; royalty revenue was $84.2M, up approximately 22.7%; and contract and other revenue was $24.0M, up approximately 7.6%. Licensing billings were $84.1M. GAAP and non-GAAP operating margins were 35% and 45%, respectively, while non-GAAP EPS was $0.77. Revenue and earnings both finished above the company's ranges.
Operating conditions. DDR5 memory-buffer, clock, and security chips continue to benefit from server-memory upgrades and higher bandwidth requirements, making product revenue the principal near-term growth driver. Royalty and contract revenue provide a high-margin licensing base. The key concern is that, while total revenue grew 20.4%, GAAP operating margin fell from 37% to 35% and non-GAAP operating margin declined from 46% to 45%. This indicates that greater product scale has not yet produced a higher group operating margin. Changes in revenue mix, product costs, and R&D investment may continue to influence the pace of profit delivery.
Guidance and cash flow. Q3 total-revenue guidance is $210M-$216M, with a $213M midpoint implying approximately 2.7% sequential growth. Product-revenue guidance is $110M-$116M, with a $113M midpoint implying approximately 13.9% sequential growth. Quarterly operating cash flow was $61.2M, capital expenditure was $12.2M, and simplified FCF was approximately $49.0M. Period-end cash and marketable securities were approximately $825M, providing a buffer for R&D investment and capital allocation. The next analytical focus is whether rapid product growth can accelerate total revenue and lift operating margin again.
Investment view. Annualizing the midpoint of Q3 non-GAAP EPS guidance mechanically puts the stock at approximately 30.7x earnings. Annualizing the midpoint of Q3 revenue guidance puts equity value at roughly 12x revenue, while the annualized simplified quarterly FCF yield is approximately 1.9%. These annualized figures ignore seasonality and serve only as valuation stress tests, but all indicate that the current price requires sustained product growth and margin recovery. Our investment view is negative. A more attractive entry would require GAAP operating margin to return above 37%, quarterly simplified FCF to hold near $50M or higher, or the valuation to offer a clearer margin of safety.
3. Company-Specific Risks
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Cadence: High valuation, acquisition integration, and accounting-definition risk. A valuation of approximately 41.8x full-year adjusted EPS requires continued upside revisions. If backlog or 12-month RPO declines, or core EDA growth slows, the stock may respond first through multiple compression. Approximately $2.10B of net acquisition cash spending in the first half raises the integration burden, while the wide gap between GAAP and non-GAAP margins may also cause investors to overestimate near-term attributable earnings.
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Celestica: Customer forecasts, supply commitments, and working-capital risk. Rapid growth depends on major customer programs advancing as planned and continued availability of critical components. If customer forecasts are cut, inventory, purchase commitments, accounts receivable, and equipment investment could absorb cash simultaneously. The fair-value gain from the total return swap embedded in GAAP EPS is not sustainable; adjusted margins or FCF below guidance would pressure the current valuation.
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F5: Product-cycle, software-growth, and revenue-mix risk. The system-refresh cycle could slow after major customers complete concentrated purchases. If software revenue cannot return to double-digit growth, the durability of product growth will weaken. Service-revenue growth is modest, and simultaneous deterioration in deferred revenue or renewal rates would erode the stable cash-flow base. Significant non-GAAP adjustments also require continued reconciliation with GAAP earnings and per-share value.
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Amkor: Expansion returns, customer concentration, and free-cash-flow risk. Full-year capex of $2.5B-$3.0B will keep consuming cash before equipment deployment, customer qualification, and production ramp are complete. If Q3 utilization or product mix falls short of plan, depreciation and inventory may rise before revenue arrives, creating substantial margin volatility. The top ten customers still represent 66% of revenue, so a delay in one major program could extend the capital-payback period.
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Rambus: Margin dilution, product demand, and valuation risk. If product revenue grows faster than high-margin IP and royalty revenue, group operating margin may remain under pressure. Slower server-memory upgrades or customer inventory adjustments could prevent the strong Q3 product-revenue guidance from extending into later quarters. A valuation of approximately 30.7x mechanically annualized adjusted EPS already embeds high growth expectations; merely meeting guidance without margin improvement could still result in multiple compression.
4. Monitoring Checklist
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Cadence: Does Q3 revenue reach the midpoint of the $1.595B-$1.625B range, non-GAAP operating margin land within 43.5%-44.5%, and EPS reach $2.01-$2.07? Does backlog remain above $8.0B, and does core EDA growth stay above 15%? Can FY operating cash flow reach approximately $2.0B while capex remains near $240M?
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Celestica: Does Q3 revenue reach $5.25B-$5.55B, adjusted EPS reach $2.88-$3.08, and adjusted operating margin reach approximately 8.4%? Do CCS and HPS programs ramp as planned? Can second-half FCF reach at least approximately $315M, completing the $600M full-year target?
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F5: Does FYQ4 revenue reach $870M-$890M and non-GAAP EPS reach $4.14-$4.26? Can systems revenue continue growing above 20%, and can software return to double-digit growth? Does deferred revenue grow at least in line with service revenue, and does full-year cash conversion hold?
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Amkor: Does Q3 revenue reach the $2.0B midpoint, gross margin reach 19%, and EPS reach $0.77? Can utilization, customer prepayments, and operating cash flow cover more capital spending? Does the second half bring full-year simplified FCF close to breakeven, and do period-end capex payables decline materially?
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Rambus: Does Q3 product revenue reach $110M-$116M and total revenue reach $210M-$216M? Does GAAP operating margin return above 37%? Can quarterly simplified FCF remain near $50M, and does product growth lift rather than dilute group profitability?
5. Sources
