Samik Chatterjee

Samik Chatterjee from JPMorgan Chase & Co. followed up on the acceleration in orders observed towards the end of the quarter and the November price increases. He sought clarification on the drivers of this order increase, specifically whether it was largely a response to the impending price actions.

Answer

President and CEO Antonio Neri explained that Q4 saw a linear progression with an acceleration in the last few weeks across the portfolio, including strong networking orders growing faster than revenue, and continued momentum in Alletra MP storage and traditional servers. He stated that pricing actions were taken prudently based on early signals for DRAM and expected NAND increases, and that customer conversations about commodity expectations are ongoing, especially with calendar year budgets.

Samik Chatterjee asked about demand trends for general-purpose servers in the U.S. and questioned if the reiterated 10% Q4 server margin target is now more achievable given a lower-than-expected tariff headwind.

Answer

CEO Antonio Neri stated that HPE has not seen a slowdown in North America, noting that monthly order demand was strong. CFO Marie Myers reiterated the path to the 10% server operating margin in Q4, explaining that Q3 margins will be impacted by the mix from a large AI deal, with improvement expected to continue into Q4.

Samik Chatterjee asked about tariff mitigation plans, seeking to understand the balance between using supply chain flexibility versus pricing actions, and the confidence in raising prices without harming demand.

Answer

CEO Antonio Neri described the approach as holistic, utilizing HPE's global supply chain to shift production while also adjusting prices accordingly. He acknowledged uncertainty around the broader market's reaction to tariffs later in the year but reiterated confidence in the company's full-year revenue guidance.

Samik Chatterjee asked about the Intelligent Edge segment's modest sequential revenue growth compared to peers, the outlook for order trends, and enterprise spending priorities within that portfolio.

Answer

President and CEO Antonio Neri explained that while orders grew for a third consecutive quarter, revenue appears flattish because growth is concentrated in subscription-based offerings like SASE and Aruba Central on the GreenLake platform, where revenue is recognized over time. He noted that data center networking grew double-digits, but campus switching has yet to fully recover. He sees networking as a major upside for HPE in fiscal 2025, especially with the pending Juniper acquisition.

Samik Chatterjee of JPMorgan Chase & Co. asked for more detail on the drivers of gross margin pressure beyond the AI server mix and questioned the forward-looking balance between further margin moderation and operating expense discipline.

Answer

CFO Marie Myers explained that year-over-year gross margins were impacted by a lower mix of high-margin networking revenue. Sequentially, the faster conversion of lower-margin AI server revenue was the primary driver. She reiterated a focus on OpEx control and selective deal-making, noting that as enterprise AI adoption grows and the Juniper acquisition closes, the margin profile is expected to improve significantly.

Samik Chatterjee from JPMorgan Chase & Co. requested an update on Pure Storage's engagements with hyperscalers beyond its initial customer and sought clarification on the nature of planned investments (e.g., product SKUs, R&D, sales and marketing) to capitalize on future revenue opportunities.

Answer

CTO Robert Lee confirmed that activities with existing and additional hyperscalers are progressing well, with engagement across the majority of the top 10 hyperscalers and multiple proofs of concept underway. He stated that investments would be directed towards the direct flash roadmap for greater densities, as well as the enterprise portfolio, AI, FlashBlade//EXA, and NeoClouds to drive growth across various market segments.

Samik Chatterjee from JPMorgan Chase & Co. sought an update on Pure Storage's engagements with hyperscalers beyond its initial customer and requested details on the nature of planned investments to capitalize on future hyperscaler revenue opportunities, including potential new product SKUs.

Answer

CTO Robert Lee confirmed that engagements with existing and new hyperscalers are progressing well, with Pure Storage involved in multiple proofs of concept with most top 10 hyperscalers. He detailed planned investments in the direct flash roadmap for higher densities, the enterprise portfolio, Enterprise Data Cloud, AI, and FlashBlade Exa to fuel growth across various market segments.

Samik Chatterjee from J.P. Morgan followed up on the topic of other hyperscalers, asking if there were any indications of what a deployment ramp might look like with a new customer and if it would be faster than the Meta engagement.

Answer

CTO Rob Lee responded that it is too early to comment on the potential ramp of future hyperscaler customers. He stated that the company's current focus is on ensuring the success of its existing customer ramp and progressing through the technology validation and proof-of-concept stages with prospective customers. More visibility on future ramps will be available once a 'design win' is achieved.

Samik Chatterjee asked about customer reactions to pricing discussions across Dell's product categories, particularly regarding the impact of rising commodity costs, and sought clarification on the FY2027 EPS growth outlook.

Answer

COO Jeff Clarke detailed Dell's strategy for navigating unprecedented commodity cost increases across all product categories, emphasizing supply chain expertise, direct model flexibility, and pricing adjustments. CFO David Kennedy clarified that the long-term EPS growth framework remains a good starting point for FY2027, supported by the go-to-market engine, OpEx scaling, and capital returns.

Samik Chatterjee asked about the expected customer reaction to pricing adjustments across Dell's product categories due to rising commodity costs, and sought clarification on whether the investor target of mid-teens EPS growth remains a starting point for the next fiscal year despite memory headwinds.

Answer

Jeff Clarke (COO, Dell Technologies) explained that unprecedented cost increases across DRAM, NAND, hard drives, and leading-edge semiconductors will impact all products. Dell will leverage its supply chain experience, direct model, and ability to adjust pricing and configurations to mitigate the impact, aiming to do better than the typical 2/3 cost recovery in 90 days. David Kennedy (CFO, Dell Technologies) confirmed that the long-term EPS growth framework from the Security Analyst meeting remains a good starting point for FY27, supported by Dell's go-to-market engine, supply chain, OpEx scaling, and capital return strategy.

Samik Chatterjee of J.P. Morgan inquired about the transition of the AI server backlog and pipeline towards NVIDIA's GB300 versus GB200, and whether this shift was creating any pricing pressure on older platforms.

Answer

Jeff Clarke, Vice Chairman and COO, described the $11.7 billion backlog as being 'rich with all forms of Blackwell,' including B200, B300, GB200, and GB300, with the pipeline also being predominantly Blackwell-based. He stated that all variants are in full production and shipping to customers, and the transition is proceeding smoothly. He did not mention any pricing pressure, instead emphasizing Dell's ability to deploy these complex systems at scale as a key differentiator.

Samik Chatterjee of JPMorgan Chase & Co. asked about customer behavior, specifically whether there was evidence of demand pull-forward due to the tariff environment. He also questioned if the cautious outlook for traditional servers and CSG was due to macro concerns or customers digesting prior purchases.

Answer

Jeff Clarke, Vice Chairman and COO, acknowledged that some demand pull-forward likely occurred but was difficult to quantify. He highlighted that while the PC refresh cycle is underway, there was a noticeable slowdown in the final weeks of the quarter across U.S. commercial PCs, traditional servers, and storage. He attributed the cautious outlook to this observed slowdown, which is now reflected in the Q2 guidance, rather than just digestion.

Samik Chatterjee questioned whether the guidance for at least $15 billion in AI server revenue is gated more by supply availability or by demand visibility, and asked about the expected linearity of this growth through the year.

Answer

COO and Vice Chairman Jeffrey Clarke indicated that supply is not seen as the primary issue, noting that Hopper supply is available and Blackwell is ramping. He emphasized that the 'at least $15 billion' figure is a confident baseline given a robust pipeline that is several multiples of the backlog. He suggested growth is driven by accelerating demand from larger models and clearer enterprise use cases, while acknowledging that customer readiness (data center power, cooling) is a factor Dell helps orchestrate.

Samik Chatterjee of JPMorgan asked about the sustainability of the strong double-digit growth in traditional (non-AI) enterprise servers, considering the segment's cyclical nature.

Answer

Executive Jeffrey Clarke expressed confidence in the recovery's durability, now in its sixth consecutive quarter of sequential growth. He identified the key driver as a modernization cycle where customers consolidate multiple older servers into a single new 16G server to free up power and floor space for AI infrastructure, suggesting the cycle is still in its early stages.

Samik Chatterjee inquired about the opportunity to attach services and storage when selling AI servers to enterprise customers and the potential gross margin differential compared to sales to Tier 2 cloud providers.

Answer

COO Jeffrey Clarke explained that since enterprises are in the early stages of AI adoption, there is a tremendous opportunity for Dell's professional services to help with strategy, implementation, and scaling complex systems. He explicitly stated that margins on sales to enterprises are better than those to the largest customers due to this value-add, and Dell has created specialized pursuit teams to capture this opportunity.

Samik Chatterjee asked about the potential impact of increased hardware component costs on customer IT spending propensity and requested clarification on the fiscal year 2026 guidance adjusted for timing issues. Chatterjee also inquired about any increased competitive activity observed in the market over the past 90 days.

Answer

Rajiv Ramaswami, Nutanix's CEO, stated that Nutanix hasn't observed any drop in demand due to increased hardware prices, and their strategy is to offer diversification and flexibility across hardware platforms. Rukmini Sivaraman, Nutanix's CFO, explained that the FY26 revenue guide reduction from $2.90-$2.94 billion to $2.82-$2.86 billion is due to more revenue shifting out of the fiscal year, driven by customer flexibility needs, growing OEM business, and potential supply chain tightness. Ramaswami added that the competitive environment remains unchanged, with Nutanix continuing to see the same set of competitors.

Samik Chatterjee inquired about the impact of increased hardware component costs on customer IT spending propensity and asked for the adjusted FY26 guidance considering timing issues. He also asked for an update on the competitive environment over the last 90 days.

Answer

CEO Rajiv Ramaswami stated that Nutanix hasn't seen a drop in demand due to hardware price increases, and their strategy is to offer diversification and flexibility across hardware platforms. CFO Rukmini Sivaraman explained that the FY26 guide, adjusted for timing, would be closer to the previously guided $2.90-$2.94 billion, with the current $2.82-$2.86 billion reflecting more revenue shifting out due to migration flexibility, OEM partner shipping, and potential supply chain tightness. Mr. Ramaswami added that the competitive environment remains unchanged, with Nutanix continuing to see the same competitors.

Samik Chatterjee inquired about the significant order acceleration Keysight experienced quarter-over-quarter from July to October, excluding acquired businesses. He asked for details on the drivers, specifically if it was attributable to wireline, production use cases, or R&D, and the visibility into the robust pipeline. He also asked CFO Neil Dougherty for more details on synergy expectations and the path for acquired businesses to reach corporate average operating margins.

Answer

President and CEO Satish Dhanasekaran attributed the Q4 revenue outperformance to broad order strength in both CSG and EISG businesses, with all regions growing. He highlighted that growth initiatives were kicking into gear and that pipeline metrics (volume, velocity, conversion, quality) were all trending up, leading to confidence in the guide. CFO Neil Dougherty explained that Keysight aims for $100 million in run-rate synergies, primarily from integrating acquisitions, with the majority of cost synergies realized after system alignment and ERP integration, expecting a step-function improvement later in FY 2026.

Samik Chatterjee asked for more details on the significant quarter-over-quarter order acceleration from July to October, excluding acquired businesses. He wanted to understand how much of this acceleration was driven by wireline, specifically related to production versus R&D use cases, and the underlying drivers of this robust pipeline visibility. He also asked Neil Dougherty about the synergy expectations for the acquired businesses and what's required for their operating margins to align with the corporate average.

Answer

Satish Dhanasekaran, President and CEO, attributed the Q4 revenue outperformance to broad order strength in both CSG and EISG, with all regions growing. Neil Dougherty, CFO, detailed plans to generate $100 million in run-rate synergies, primarily from integrating acquisitions into Keysight's ERP environment, expecting relatively low realized synergies in early FY2026, with a step-function improvement later in the year and a longer tail into 2027, aiming for operating margin accretion post-integration.

Priyanka, on behalf of Samik Chatterjee of JPMorgan, asked about the R&D investment mix in wireline optics between next-generation speeds like 1.6T and current-gen speeds, and requested a breakdown of data center customers.

Answer

CEO Satish Dhanasekaran clarified that for wireline optics, 400G and 800G represent the majority of current volume, while 1.6T and beyond are in the research and early deployment phase. He did not provide a specific customer breakdown but noted that R&D spending and unlocking supply chain constraints are the primary demand drivers.

Samik Chatterjee asked about the sustainability of wireline demand, seeking to understand the mix between R&D-driven progress and volume-driven production. He also followed up on the competitive landscape as testing moves toward semiconductor-level for technologies like silicon photonics.

Answer

CEO Satish Dhanasekaran explained that while the wireline business is still heavily R&D-oriented (roughly 70-30), it is benefiting from the manufacturing ramp for digital infrastructure. He affirmed that Keysight is well-positioned for the shift to silicon-level testing, having invested in silicon photonics capabilities 18 months ago, which combines the company's core strengths in optical and electrical metrology.

Samik Chatterjee asked about the sustainability of wireline demand, seeking to understand the mix between R&D and production. He also inquired about the competitive landscape as testing shifts toward the semiconductor level with silicon photonics.

Answer

CEO Satish Dhanasekaran estimated the wireline business is still heavily R&D-focused but has seen a ~10-point shift toward manufacturing. He affirmed that as testing moves closer to the silicon level, Keysight is well-positioned due to prior investments in silicon photonics test capabilities, which combine its core electrical and optical expertise to address emerging complexities like co-packaged optics.

Samik Chatterjee from JPMorgan Chase & Co. asked about the recovery assumptions for the semiconductor and general electronics markets embedded in the 5% revenue growth forecast for fiscal 2025. He also questioned how Keysight plans to reach its long-term operating margin target of 31-32% beyond volume leverage.

Answer

Executive Satish Dhanasekaran expects the semiconductor business to grow, driven by wafer test solutions, and noted that general electronics returned to growth in Q4. Executive Neil Dougherty explained that the operating margin gap is partly due to recent acquisitions that are currently dilutive. He anticipates significant profit leverage as these businesses are integrated into the Keysight operating model, which will help close the gap to the long-term target.

Samik Chatterjee asked about Cisco's participation in optical demand both inside and outside the data center, particularly regarding Acacia's growth and scale-across pull-through. He also sought clarification on whether sovereign customer orders are included in the projected 2x AI orders for fiscal 2026.

Answer

Chuck Robbins, Chairman and CEO, confirmed Cisco's participation in both inside and outside data center optical demand, with pluggable optics now sold to all major Hyperscalers. He clarified that the '2x orders' for FY26 refers specifically to Hyperscale customers and products measured last year, and does not include the NeoCloud, Sovereign Cloud, or Enterprise pipeline. Mark Patterson, CFO, added that sovereign build-outs are not material to this year's guide, with Chuck Robbins noting that export licenses are still being processed, and material flow is expected in the second half of the fiscal year.

Samik Chatterjee asked about the broader optical demand, specifically how Cisco is participating in both inside and outside the data center pull-through from scale-across. He also sought clarification on whether the '2x orders' guidance for AI from Hyperscalers includes potential orders from Sovereign customers.

Answer

Chairman and CEO Chuck Robbins confirmed Cisco's participation in both inside and outside data center optical demand, noting that all major Hyperscalers are now customers of their pluggable optics. He clarified that the '2x orders' expectation for Hyperscale customers in fiscal year 2026 refers to the same products and customers as last year, and does not include the $2 billion-plus pipeline from Neocloud, Sovereign Cloud, and Enterprise customers. CFO Mark Patterson added that early phases of sovereign build-out are not material to this year's guide.

Samik Chatterjee of JPMorgan Chase & Co. questioned the sustainability of the networking growth cycle into FY2026, asking how it aligns with the medium-term 2-5% growth target from the Investor Day, particularly regarding legacy infrastructure upgrades.

Answer

CEO Chuck Robbins expressed confidence in maintaining the growth range, citing the AI revolution as a key driver for network modernization across all segments. He also pointed to multiple refresh cycles beyond the campus, including routing, data center networking, and WiFi 7, and a multi-billion dollar installed base of pre-Cat9k switches.

Asked about the potential impact of tariffs on customer demand and whether hyperscaler AI deployments are accelerating or proceeding as expected.

Answer

Cisco is not seeing any evidence of customers pulling demand forward to get ahead of tariffs. On the hyperscaler front, demand is exceptionally strong, with customers stating, 'If you can build more, we will buy more.' Deployments are moving rapidly, and some customers have already increased their 2025 unit targets by 50%.

Samik Chatterjee from JPMorgan Chase & Co. inquired about the implications of three consecutive quarters of strong data center switching orders, asking if this signals enterprises are already preparing for AI. He also questioned whether exceeding the $1 billion AI order target implies an accelerated revenue recognition timeline.

Answer

CEO Chuck Robbins interpreted the data center switching strength as evidence that customers are modernizing their private cloud infrastructure, partly in preparation for future AI applications, but noted the majority of the enterprise AI build-out is still ahead. Regarding AI revenue, CFO Scott Herren confirmed that while orders are strong, revenue realization is dynamic and dependent on shipment timing, with the majority of AI-related revenue still expected in the second half of the fiscal year.

Samik Chatterjee inquired about the March quarter outlook for handsets, specifically if the typical high single-digit quarter-over-quarter decline rate is still applicable given potential changes in share with the primary Android customer.

Answer

CFO Akash Palkhiwala stated that Qualcomm is not guiding beyond the first fiscal quarter. He highlighted strong business momentum from fiscal 2025 carrying into the December quarter guidance and the rest of the fiscal year, also noting the AlphaWave acquisition expected to close in Q1 2026.

Samik Chatterjee inquired about the expected sequential decline in handset revenue for the March quarter, given concerns about the primary Android customer's share, and whether the typical high single-digit decline rate still applies.

Answer

CFO Akash Palkhiwala declined to guide beyond the first fiscal quarter but emphasized strong business momentum from fiscal 2025 carrying into the December quarter guidance and the rest of the fiscal year. He also reminded that the AlphaWave acquisition is expected to close in calendar Q1 2026.

Samik Chatterjee of JPMorgan Chase & Co. inquired about Qualcomm's data center strategy, specifically how the AlphaWave acquisition will be integrated and the approach to customer selection regarding customization versus standardization. He also asked for color on the Q3 handset revenue performance and the drivers for the strong Q4 guidance.

Answer

President & CEO Cristiano Amon explained the data center strategy focuses on CPU assets for head units and building accelerator cards, with AlphaWave providing crucial scale-out connectivity. CFO & COO Akash Palkhiwala addressed the handset questions, noting Q3 had a seasonally weaker mix, which is more than offset by strength in Q4 driven by new flagship launches.

Samik Chatterjee inquired about the specific drivers behind the revenue upside in the IoT segment during the quarter and whether there was any evidence of demand pull-forward in that business. He also asked about the M&A strategy, particularly how recent acquisitions like Focus AI and Edge Impulse enhance QUALCOMM's position in its diversification end markets.

Answer

Akash Palkhiwala explained that IoT growth was strong across consumer, networking, and especially industrial, driven by the market's transition from microcontrollers to microprocessors with AI. Cristiano Amon, President and CEO, added that the acquisitions are consistent with the company's strategy to build out its IoT software platform, particularly for the industrial edge, to scale its technology.

Samik Chatterjee of JPMorgan Chase & Co. inquired about the 2025-2026 outlook for the Snapdragon PC platform, focusing on the expected adoption curve between enterprise and consumer segments, and also asked about the impact of China's smartphone subsidies.

Answer

CEO Cristiano Amon stated Qualcomm is pleased with the PC trajectory, targeting over 100 designs by 2026 and noting over 10% share in the >$800 U.S. retail Windows laptop market. CFO Akash Palkhiwala added that while it's too early to quantify the impact of China's new subsidies, historical precedent suggests they can expand the market, which is not yet factored into guidance.

Samik Chatterjee inquired about the key drivers of the IoT segment's acceleration, seeking to parse the impact of a recovery in traditional IoT versus new contributions from the PC market, and asked about the sustainability of the company's overall double-digit growth.

Answer

CFO Akash Palkhiwala stated that the IoT growth in Q4 and the Q1 forecast was broad-based, with benefits across consumer, industrial, and networking categories. He highlighted that new product launches in PC and XR, along with channel inventory normalization, were key contributors. He deferred longer-term growth sustainability questions to the upcoming Investor Day.

Samik Chatterjee inquired about the drivers behind Lumentum's confidence in sustained transceiver growth, particularly the significant quarter-over-quarter increase, and whether customer diversification plays a role. He also asked about the revenue implications of the 40% increase in data comm chip capacity and the expected mix shift towards 200-gig EMLs.

Answer

President and CEO Michael Hurlston attributed confidence to improved execution, enabling participation in early customer ramps and a 'layering effect' of revenue from new product cycles, primarily with their largest customer. He noted the 40% capacity increase would combine with a growing mix of 200-gig lasers (expected to be 10% by early calendar 2026) to boost revenue. EVP and CFO Wajid Ali added that the increased indium phosphide capacity, focused on higher-margin laser chips, would positively impact EPS in coming quarters.

Samik Chatterjee asked about the drivers behind Lumentum's confidence in sustained transceiver growth, including customer diversification and the significant sequential increase into the December quarter. He also inquired about the revenue implications and usage plan for the 40% increase in data comm chip capacity, particularly regarding the mix shift towards 200-gig EMLs.

Answer

President and CEO Michael Hurlston attributed confidence to improved execution, early participation in customer ramps, and a layering effect with 1.6T transceivers, primarily with their largest customer. For the capacity increase, he explained a dual effect of raw output and the layering in of 200-gig lasers, expecting 10% of the mix from 200-gig in early calendar 2026. EVP and CFO Wajid Ali added that this capacity increase for higher-margin laser chips would positively impact EPS.

Samik Chatterjee pressed for details on the timing of achieving the $600 million quarterly revenue target, suggesting it could happen before the June 2026 quarter, and inquired about the potential impact of semiconductor tariffs.

Answer

President and CEO Michael Hurlston emphasized the guidance included the phrase "or earlier," citing broad-based strength across the portfolio. CFO Wajid Ali addressed tariffs, stating that based on a review of new regulations, Lumentum's products are believed to be exempt and no material impact is anticipated.

Samik Chatterjee asked for a breakdown of the drivers behind the guided sequential revenue increase for the Cloud & Networking segment and for details on the capacity expansion plans for EMLs, particularly regarding the balance of supply and demand through 2026.

Answer

EVP and CFO Wajid Ali confirmed the Cloud & Networking segment is expected to grow by approximately $25 million quarter-over-quarter, driven primarily by both Datacom chips and transceivers, though he noted that supply chain shortages are constraining even higher potential growth. President and CEO Alan Lowe elaborated on EML capacity, reiterating plans for 40% growth from June '24 to June '25 and another 40% by the end of calendar '25. He clarified that the overall indium phosphide chip supply, not just 200G, is constrained and will likely not meet demand until at least calendar year 2026.

Samik Chatterjee of JPMorgan Chase & Co. asked for a breakdown of the strong Q2 revenue guidance drivers and questioned the potential scale of recent hyperscale customer wins compared to existing ones.

Answer

President and CEO Alan Lowe explained that the Q2 growth is primarily driven by a significant pickup in datacom modules, with modest contributions from telecom and datacom chips due to capacity timing. Regarding new customers, Lowe stated that while the opportunity is very large, the ultimate magnitude depends on Lumentum's execution and ability to earn a greater share of business as production ramps in the first half of calendar 2025.

Samik Chatterjee asked about the variability in Arista Networks' shipments, customer-level lumpiness, any changes in tier one customers' plans for 100,000+ GPU cluster sizes, and whether the variability is supply-driven.

Answer

Jayshree Ullal, Arista Networks' CEO and Chairperson, confirmed that the variability is largely supply-driven, with demand exceeding their ability to ship due to long component lead times (38-52 weeks). She noted that three out of four large GPU deployments have already crossed the 100,000 mark.

Samik Chatterjee inquired about the variability in Arista's shipments and customer-level lumpiness, asking if it's primarily supply-driven and how it relates to tier one customers progressing towards 100K+ GPU cluster sizes.

Answer

Jayshree Ullal, CEO and Chairperson, confirmed that the variability is largely supply-driven, with demand surpassing Arista's ability to ship due to long lead times (38-52 weeks) for various components. She noted that three out of four large GPU deployments have already exceeded the 100,000 GPU mark.

Samik Chatterjee of J.P. Morgan asked how Arista expects to meet its $750 million AI back-end revenue target given the absence of a previously expected fifth customer, and requested an update on the fourth, slower-moving AI customer.

Answer

Chairperson & CEO Jayshree Ullal explained that while two AI titan customers are deploying strongly and a third is progressing, the loss of the fifth customer and slowness of the fourth is being offset by the growing aggregate demand from 25-30 enterprise and neo-cloud AI customers. She noted these smaller deployments are collectively making up the difference.

Samik Chatterjee asked if Arista is gaining more visibility into 2026 from its key AI customers and what the early demand signals for that year look like.

Answer

CEO Jayshree Ullal confirmed Arista has strong visibility for 2025 and is getting 'unofficial visibility' for 2026 as customers plan around long component lead times. She stated that based on current execution and early signals, 2026 is 'looking good' for the AI sector.

Samik Chatterjee asked about the value proposition of Arista's EOS software in the AI back-end network, particularly in the context of competition from white box solutions.

Answer

CEO Jayshree Ullal emphasized that high-value GPUs require a mission-critical network. She stated that the AI spine is almost always based on Arista's EOS due to its superior high-availability, routing, and telemetry features, with the 7800 series as a flagship product. While some large customers may experiment with non-EOS solutions on the network leaf, building a resilient system without the robust capabilities and operational support of EOS is a significant challenge.

Samik Chatterjee questioned Arista's 2025 guidance, asking why the non-AI and non-campus business is projected to grow only in the single digits after a strong 2024.

Answer

CEO Jayshree Ullal explained that visibility is limited to about six months and they prefer a cautious approach, similar to how 2024 began. She noted that large cloud customers are aggressively pivoting to AI, leading to faster growth in AI and campus sectors compared to the 'classic' cloud and data center markets. Ullal stated this is their best current assessment but acknowledged it could improve.

Samik Chatterjee from JPMorgan Chase & Co. inquired about the specific nature of opportunities driving strong services growth, particularly those related to AI deployments, and CDW's strategy regarding M&A to further consolidate its services offerings. He also asked about the primary drivers behind the unevenness in data center upgrades among corporate customers, specifically whether it's due to AI decision-making, public cloud evaluations, or broader macro challenges.

Answer

Al Miralles, CFO of CDW, reported strong 14% growth in managed and professional services, with key drivers being data and AI, security, and cloud. He noted that services have grown from 5% of net sales in 2020 to 9% this quarter and are expected to be a significant growth contributor. Regarding uneven data center upgrades, Mr. Miralles primarily attributed it to the overall uncertainty in the macro and geopolitical environment, leading to a "start and stop" pattern for larger projects, rather than AI or public cloud being the main factors, though he acknowledged AI is a variable.

Samik Chatterjee asked for deeper insights into the strong services growth, particularly the nature of opportunities related to AI deployments, and CDW's thoughts on M&A to further consolidate its services offerings. He also inquired about the primary drivers behind the unevenness in data center upgrades among corporate customers, specifically if AI decision-making or public cloud evaluation is a larger factor.

Answer

Al Miralles, CFO of CDW, highlighted strong growth in managed and professional services, driven by data and AI, security, and cloud. He noted that services, now 9% of net sales, are expected to be an outlier in growth contribution. Regarding data center upgrades, Miralles attributed the unevenness more to overall macro and geopolitical uncertainty causing companies to delay larger projects, with AI being a variable but not the primary driver.

Samik Chatterjee from JPMorgan Chase & Co. inquired about customer reactions to recent legislative changes and whether they were driving spending decisions. He also asked about the conservative nature of the implied Q4 earnings guidance.

Answer

Chair & CEO Chris Leahy noted that commercial customers are discussing potential CapEx benefits from legislation, while public sector conversations are focused on funding shifts between federal and state agencies. CFO Al Miralles stated the Q4 outlook includes conservatism, particularly for the federal and education segments, and assumes more modest corporate spending than seen in the first half.

Samik Chatterjee questioned whether robust Q2 order activity was driven by underlying demand or customers spending budgets preemptively. He also asked about the gross margin cadence for the year given the client device pull-forward.

Answer

CEO Christine Leahy characterized current demand as 'solid and balanced' across both transactional and project-based work, though the outlook accounts for a later-year slowdown from the pull-forward. CFO Albert Miralles stated that he expects full-year gross margins to be similar to 2024 levels, with the Q1 margin variance almost entirely explained by the mix shift to client devices.

Samik Chatterjee inquired about the drivers behind the standout 30% growth in the Healthcare segment in Q4 and asked about the impact of Microsoft's changing cloud subscription policies.

Answer

CEO Christine Leahy attributed the strong Healthcare performance to strategic investments in expertise and a broad portfolio, noting they were also lapping weak comparisons. CFO Al Miralles added that some large, potentially non-recurring transactions contributed. Regarding Microsoft, Miralles stated the policy changes were well-telegraphed and are not expected to have a material impact on 2025 results.

Samik Chatterjee questioned if CDW was considering changes to its business mix to mitigate the lumpiness from its exposure to large projects. He also asked about the likelihood of a post-election budget flush in the federal government sector.

Answer

CEO Christine Leahy responded that the company is accelerating its digital strategy to create a "flywheel" that drives velocity in deals of all sizes, allowing sales professionals to focus on high-value engagements while customers use self-serve options for smaller transactions. Regarding a budget flush, she noted the current election cycle is not normal and the federal government remains paused. CFO Albert Miralles added that the Q4 outlook bakes in appropriate caution around political uncertainty.

Samik Chatterjee asked for a comparison of the ramp-up trajectories between the new HPC customer and the new Telecom customer, noting that the new Telecom customer appeared to ramp faster than initially expected for HPC. He also requested a rank order of the major drivers contributing to the anticipated $100 million sequential revenue increase for the quarter.

Answer

Seamus Grady, Chairman and CEO, explained that the HPC and new Telecom programs are ramping differently due to their distinct product types; HPC is an existing product with high demand, while the new Telecom product is new to the market. He noted that HPC's ramp started slower due to complexity and automation but is expected to see strong growth. Mr. Grady declined to rank order the growth drivers for the sequential revenue increase, stating that HPC, new Telecom programs, DCI, and DataCom are all significant contributors, and the company is focused on execution amidst strong demand.

Samik Chatterjee asked for a comparison of the ramp rates between the HPC customer and the new telecom customer, noting that the new telecom customer seemed to have a more significant contribution than initially expected. He also requested a rank order of the big drivers contributing to the roughly $100 million sequential revenue increase.

Answer

Chairman and CEO Seamus Grady explained that the ramps differ due to product nature: HPC is an existing product with high demand where Fabrinet is one of several suppliers, while the new telecom program is a new product that needs to grow in the market. He declined to rank order the growth drivers but identified HPC, new telecom programs, DCI generally, and DataCom as significant contributors, emphasizing strong demand and execution.

Speaking for Samik Chatterjee, Joe Cardoso asked about the expected impact of new customer ramps on gross margin and OpEx, and sought details on the Datacom supply constraints, including their magnitude, duration, and the specific components involved.

Answer

CFO Csaba Sverha stated the goal is to maintain the target gross margin range despite temporary pressure from new ramps and seasonal Q1 costs, while maintaining OpEx discipline to drive operating leverage. CEO Seamus Grady added that the supply constraints affect a small number of components for 1.6T EML-based products and are expected to be temporary, potentially lasting one to two quarters.

Samik Chatterjee asked for more detail on the datacom revenue decline, questioning if it was due to customer inventory of 800G products or a shift in supplier allocation. He also inquired about the expected ramp of 1.6T products in the June quarter and the nature of the new engagement with Amazon Web Services, including its margin opportunity and scope.

Answer

CEO Seamus Grady clarified that the 1.6T ramp is still ahead, with the bulk expected in the second half of the year, aligning with a customer's product launch. He believes the 800G decline is more likely due to share allocation as Fabrinet converts capacity for the 1.6T ramp, rather than customer inventory issues. Regarding Amazon, he stated the relationship will start with specific product families and expand, with revenue ramping in fiscal 2026. The agreement is not exclusive and covers advanced manufacturing services.

Samik Chatterjee inquired about the confidence in the ramp timing for the next-generation datacom product, asking if a Q4 ramp is expected and if the customer's schedule has changed. He also asked how the volumes and pricing for this new product will compare to the 800G ramp.

Answer

CEO Seamus Grady stated that Fabrinet is prepared to ramp production according to its customer's schedule and has good visibility. He noted that while the volume ramp is expected to be steep, the price uplift from 800G to 1.6T may be less than traditional due to proactive cost reduction efforts, ensuring the new product is highly cost-competitive at launch.

Samik Chatterjee of JPMorgan Chase & Co. asked about the 800G product mix between Fabrinet-produced in-house designs and merchant suppliers for their primary customer, potential capacity constraints, and the sustainability of strong automotive demand.

Answer

CEO Seamus Grady stated that Fabrinet lacks visibility into its customer's decision-making between in-house and merchant transceivers but remains the sole source for their designed products. He confirmed there are no capacity constraints and explained that the robust automotive growth is driven by sustainable market share gains, not inventory adjustments.

Samik Chatterjee asked about the influence of smartphone subsidies in China on iPhone momentum and the extent to which consumers are leveraging these subsidies. He also questioned the components of the sizable OpEx increase for the December quarter and whether this growth rate relative to revenue is a sustainable expectation.

Answer

CEO Tim Cook confirmed that subsidies play a favorable role in China, driving consumer demand, but noted they only apply to certain price ranges, excluding some higher-priced Apple products. CFO Kevan Parekh explained that the OpEx increase is primarily driven by increased R&D investments in AI and the product roadmap, emphasizing that while OpEx growth has outpaced revenue, gross margin expansion and healthy operating leverage have led to operating income growth generally outpacing revenue over several years.

Samik Chatterjee asked about the role of smartphone subsidies in driving momentum in China and the portion of consumers leveraging these subsidies. He also inquired about the sizable increase in operating expenses for the December quarter, its components, and whether faster OpEx growth than revenue is a going-forward expectation.

Answer

CEO Tim Cook confirmed that subsidies play a favorable role in China, applying across multiple categories but only to certain price ranges, and are driving some consumer demand. CFO Kevan Parekh attributed the OpEx increase primarily to R&D investments in AI and the product roadmap, noting that while OpEx grows faster than revenue, gross margin expansion leads to healthy operating leverage and operating income growth outpacing revenue.

Samik Chatterjee requested more detail on the estimated one-percentage-point demand pull-ahead, asking which products and regions were most affected. He also asked if unique sourcing factors in the December quarter could cause the tariff impact to differ significantly from the September quarter's estimate.

Answer

CEO Tim Cook clarified that the demand pull-ahead was principally for iPhone and Mac, occurred largely in the United States during April, and was based on unusual buying patterns. He cautioned against projecting tariff costs, noting that rates could change, the previous quarter had some unique inventory builds, and the December quarter is typically a higher volume quarter, to which tariffs are currently linear.

Samik Chatterjee asked if Apple Intelligence continues to have a visible impact on iPhone sales in newly launched countries and whether delays to personalized Siri features have affected consumer upgrade willingness. He also inquired about trends in U.S. consumer behavior, such as trade-downs, given the macro environment.

Answer

CEO Tim Cook confirmed that in the March quarter, markets with Apple Intelligence showed stronger year-over-year iPhone 16 family performance. He noted many of the new language rollouts occurred in Q3. Regarding the U.S. consumer, Cook pointed to the company's overall sequential revenue acceleration to 5% and the strong performance of the Americas segment as evidence of positive results in Q2, declining to predict future consumer behavior.

Samik Chatterjee asked about the sustainability of Mac and iPad growth and the impact of Apple Intelligence on Mac volumes, and also inquired about the strategy behind supply chain planning in India.

Answer

CEO Tim Cook attributed the 16% Mac growth to new M4 products, positioning the Mac as the 'best AI PC'. Regarding India, he explained that manufacturing there serves both the growing domestic market and export needs to achieve necessary economies of scale.

Samik Chatterjee asked if the consistent availability of Apple Intelligence across the iPhone 16 lineup was changing consumer purchasing behavior in terms of the mix between Pro and non-Pro models. He also asked for comment on the DOJ lawsuit related to the Google search revenue sharing agreement.

Answer

CEO Tim Cook stated that it was too early to determine the product mix, as the iPhone 16 Pro and Pro Max models were supply-constrained during October. He declined to comment on the ongoing legal case with the DOJ.

Samik Chatterjee asked about the drivers of the memory increase in Q4 2025 and 2026, specifically how much is due to market share gains versus general industry purchasing patterns. He also inquired about gross margin drivers for Q4, given the muted guide despite volume leverage.

Answer

CEO Greg Smith explained Teradyne's memory market share dynamics: high share in final test (Flash, DRAM, HBM performance) but lower in wafer sort. He expects revenue growth in 2026 but not necessarily significant share increase due to SAM expansion in wafer sort. CFO Sanjay Mehta attributed the muted Q4 gross margin guide to headwinds from factory expansion investments in multiple geographies and one-time elevated supply chain costs incurred to meet accelerated customer demand, offsetting volume tailwinds.

Samik Chatterjee asked about the memory increase in Q4 and next year, inquiring how much of it is related to market share gains versus general industry purchasing patterns. He also asked about end markets where Teradyne expects to gain share and highlight opportunities for 2026. Additionally, he sought clarification on the Q4 gross margin guide (57-58%) relative to Q3 (58.5%), given expected volume leverage.

Answer

CEO Greg Smith explained that Teradyne's memory share is high in final test but lower in wafer sort. He expects revenue growth in 2026, with an expansion in the wafer sort SAM, but not necessarily significant share increase there. CFO Sanjay Mehta attributed the Q4 gross margin headwinds to investments in factory expansion in multiple geographies and one-time supply costs incurred to meet accelerated demand, offsetting volume tailwinds.

Samik Chatterjee of J.P. Morgan asked for help sizing the total addressable market for GPU test equipment, an area Teradyne has historically not served. He also inquired about the robotics business, specifically the timing of expenses versus revenue for the new large customer win and its impact on operating leverage.

Answer

President & CEO Greg Smith estimated the merchant AI accelerator (GPU) market is potentially more than double the size of the VIP compute TAM, representing a large opportunity. Regarding robotics, he noted some expenses for US manufacturing are being incurred in 2025, with positive revenue impact and operating leverage from higher volumes expected in 2026 as fixed costs are absorbed.

Priyanka Thapa, on behalf of Samik Chatterjee, questioned if Teradyne has observed any secondary impacts from tariffs, such as losing business to non-U.S. competitors, and asked about the long-term measures needed to achieve a 60% gross margin.

Answer

CEO Greg Smith responded that the company has not seen any competitive losses due to tariffs, stating they have not been a deciding factor in customer decisions. CFO Sanjay Mehta reiterated that the company's long-term business model targets a 59-60% gross margin through product differentiation, and despite short-term mix fluctuations, this remains the goal.

Samik Chatterjee asked how the company is de-risking its second-half weighted forecast and inquired about the confidence in maintaining a 50% market share in the VIP ASIC test market.

Answer

CFO Sanjay Mehta explained that confidence in the second half comes from tightening capacity utilization in the first half and a strong customer engagement pipeline for compute, auto, and industrial. CEO Greg Smith added that confidence in maintaining 50% VIP share stems from having a differentiated product for leading-edge devices and strong relationships with both design service providers and the hyperscalers themselves.

Samik Chatterjee sought clarity on whether the expected accelerated growth in 2025 will be driven primarily by a cyclical recovery in markets like mobile, or if the view on compute and memory has changed. He also asked if the AI-related business would see the same Q1 seasonality as the cyclical parts of the business.

Answer

CEO Greg Smith updated his view, stating that the compute market will likely get "a bit hotter" and grow from current levels, while the rest of the market improves incrementally underneath a strong AI market. CFO Sanjay Mehta explained that Q1 seasonality is typical, especially in Robotics, and that lower lead times have reduced visibility, though the company is well-positioned to handle unforecasted demand.

Samik Chatterjee asked for clarification on the $500 million full-year guidance raise, specifically whether it was primarily driven by the data center market or other end markets like medical. He also inquired about the revenue headwind caused by the Ukraine facility shutdown in relation to this guidance increase. For his follow-up, Mr. Chatterjee asked about expectations for the Amazon partnership and if it contributes to the optimism for the data center business announcements planned for the May investor day.

Answer

CEO Revathi Advaithi confirmed that the guidance raise stems from strong performance in data center and health solutions, alongside stabilizing trends in automotive. CFO Kevin Kesse quantified the Ukraine facility shutdown as a revenue headwind slightly north of $100 million in the second half, representing approximately 1% of Flex's revenue. Ms. Advaithi added that raising guidance despite this impact reflects very strong results. Regarding the Amazon partnership, Ms. Advaithi expressed bullishness on the data center cloud space, attributing it to the Amazon collaboration, continued growth with other hyperscalers, colocation businesses, and Neo clouds. She emphasized that these are long-term plays, with the bullish outlook to be reflected in CapEx, investments, and updated long-term guidance at the May investor day.

Samik Chatterjee asked for a breakdown of the $500 million full-year guidance increase by end market, specifically if data centers or medical were the primary drivers, and the impact of the Ukraine facility shutdown on the raised guidance. He also asked about the Amazon partnership's contribution to Flex's data center optimism for the May investor day.

Answer

CEO Revathi Advaithi confirmed the guidance raise was primarily driven by data centers and health solutions, with stabilizing trends in automotive also contributing. CFO Kevin Krumm stated the Ukraine facility shutdown represented a headwind of slightly over $100 million in the second half. Revathi Advaithi expressed bullishness about the Amazon partnership and other hyperscaler growth, viewing it as a long-term play that will be reflected in updated long-term guidance in May.

Samik Chatterjee asked why the full-year margin outlook was not raised more significantly given the strong Q1 revenue beat and guidance increase. He also inquired about the specific Q1 growth trends within the data center business, particularly the split between cloud and power.

Answer

CFO Kevin Krumm explained that while operating profit dollars increased, the margin percentage range was maintained due to the inclusion of low-margin tariff revenue in the forecast and planned investments in the second half. CEO Revathi Advaithi added that the company remains conservative after a strong Q1. Regarding data centers, she confirmed they are on track for the 35% annual growth target and reiterated that Power is expected to have a stronger year than Cloud, but declined to provide specific quarterly breakdowns.

Samik Chatterjee asked about the primary drivers for the strong fiscal 2026 operating margin guidance beyond cloud mix, and inquired about customer demand for Flex's North American footprint amid regionalization trends.

Answer

CFO Kevin Krumm attributed the margin strength to favorable mix from the data center power and services businesses, coupled with ongoing operational efficiencies. CEO Revathi Advaithi confirmed that customer inquiries for North American capacity are extremely high, and Flex's established footprint allows them to strategically select business that aligns with their margin improvement goals.

Samik Chatterjee questioned why the strong Q3 revenue beat was not translating into a higher Q4 guide, asking if the sequential moderation was due to incremental headwinds in auto or a potential pull-forward of demand. He also requested more detail on Flex's data center exposure, seeking to understand the mix between custom ASIC programs and traditional GPU/CPU servers across its hyperscaler customers.

Answer

CEO Revathi Advaithi explained that the Q4 revenue guidance is in line with typical seasonality, which usually sees a sequential decline from Q3. She noted the EPS guide is down slightly due to a tax rate change but remains up significantly year-over-year. On data center exposure, Advaithi declined to break out the mix between GPU and ASIC to protect customer confidentiality but reiterated that Flex's business is not negatively impacted by recent industry developments. She emphasized that lower-cost AI models will likely drive more applications and infrastructure spend, which is a net positive for Flex.

Representing Samik Chatterjee, an analyst asked about current order trends in the data center business and whether they have accelerated compared to 90 days prior. A follow-up question explored how much leverage Flex has to protect its EPS guidance through margin improvement if the revenue outlook for automotive or industrial markets were to weaken further.

Answer

CEO Revathi Advaithi responded that while Flex does not provide forward-looking order data, the reported 40% growth rate indicates a very strong backlog and execution pipeline. She expressed high confidence in the current EPS outlook, attributing the company's resilience to its successful business transformation, which enables strong performance through economic cycles via an improved business mix and excellent cost efficiency.

Samik Chatterjee asked about the implied margin guidance for fiscal first quarter (F1Q), noting that even after adjusting for the non-GAAP calculation change, the implied margins appear to show robust sequential expansion relative to fiscal fourth quarter (F4Q), and requested clarification on the drivers behind this expansion.

Answer

CFO Heath Mitts, while not guiding specific margin targets, indicated that a modest sequential increase in margins is a fair assumption. He attributed this primarily to the transportation segment, which typically experiences its highest auto production numbers in the fiscal first quarter. The industrial segment's margins are expected to be neutral or flattish sequentially.

Samik Chatterjee from J.P. Morgan asked for clarification on the AI opportunity, noting that while management sees it as 'early innings,' there is a perception that TE is already far along in market share gains. He asked about share dynamics between hyperscalers and chip companies.

Answer

CEO Terrence Curtin reiterated the need to engage with the entire ecosystem, including chipmakers, hyperscalers, and contract manufacturers, to succeed in AI. He emphasized the broadness of TE's customer engagement, which he believes creates future market share opportunities, but stressed the current focus is on capitalizing on the massive growth ramp from $300 million to over $800 million in revenue.

Samik Chatterjee questioned the drivers behind the increased AI revenue guidance (from $600M to over $700M), asking if it was due to stronger-than-expected orders or initial conservatism.

Answer

CEO Terrence Curtin stated the guidance increase was driven by real momentum and accelerating program ramps with hyperscaler customers, not initial conservatism. He highlighted that AI-related orders increased 150% in the quarter, giving the company confidence in the higher forecast as they work to meet strong customer demand.

Samik Chatterjee asked for the specific data points or indicators that are giving management confidence in a commercial vehicle market improvement later in the year.

Answer

CFO Heath Mitts noted that while a near-term recovery isn't expected, customer discussions for 2026 are looking positive. CEO Terrence Curtin added a key driver: a 2027 emissions standard change is anticipated to cause a pull-forward of heavy truck demand starting in late 2025 and continuing into 2026, which underpins their confidence in a future recovery.

Samik Chatterjee inquired about Logitech's expectations for promotional activity from distribution partners in the December quarter, its influence on gross margin guidance, and how the company maintains a disciplined OpEx run rate while still growing.

Answer

CEO Hanneke Faber noted that partners are optimistic for the holidays, expecting a mix of strong visibility for premium offerings and targeted promotions for lower-end products, especially in Europe against Chinese competition. CFO Matteo Anversa detailed that the Q3 gross margin guide (42%-43%) reflects continued product cost reductions offsetting promotional spend, with pricing actions fully mitigating tariff impacts. He added that OpEx discipline focuses on G&A reductions (e.g., contractor costs, hiring pauses) to reinvest savings into R&D and sales/marketing for growth.

Samik Chatterjee from JPMorgan Chase & Co. asked about anticipated promotional activity from distribution partners for the December quarter, including 11-11 in China, and how this influences the gross margin guidance. He also inquired about the areas of trade-offs and efficiencies driving the disciplined OpEx run rate.

Answer

CEO Hanneke Faber noted optimism from partners for the holidays, expecting a mix of strong visibility for premium offerings and targeted promotions for lower-end products, particularly in Europe against Chinese competition. CFO Matteo Anversa detailed the Q3 gross margin guide (42-43%), similar to Q2, with pricing offsetting tariffs, product cost reductions offsetting promotions, and no inventory reserve release impact. He explained that OpEx discipline (24-26% of net revenue) is primarily driven by G&A cost controls (contractor costs, hiring pauses, travel control), with savings re-channeled into R&D and sales & marketing.

Samik Chatterjee of J.P. Morgan asked about the drivers behind the Q2 revenue guidance, particularly the interplay between pricing benefits and potential market share shifts, the expected recovery from the Q1 Americas shipment pause, and the tariff impact on gross margin beyond Q2.

Answer

CEO Hanneke Faber explained the 1-5% Q2 revenue guidance range reflects uncertainty around consumer reaction to US price increases. CFO Matteo Anversa noted that with the current tariff environment, the net impact on gross margin (0 to -100 bps) could be a proxy for the rest of the year, but he stressed the situation remains fluid. He also expects Europe and APAC to continue performing well, with the guidance range largely dependent on the North American outcome.

Samik Chatterjee asked for clarification on the sell-in versus sell-through dynamic for the quarter and questioned the long-term gross margin outlook, asking if margins could return to the 43% range after the manufacturing shifts are complete.

Answer

CFO Matteo Anversa clarified that sell-through outpaced sell-in by two points in Q4, which is a normal post-holiday dynamic, leaving channel inventory healthy. CEO Hanneke Faber added that it is too early to speculate on the long-term margin profile due to numerous variables like trade policy and exemptions. Matteo Anversa emphasized that the company is focused on controllable factors like product cost reduction and OpEx discipline.

Samik Chatterjee asked about the inventory build for a second consecutive quarter, questioning if retailers were preparing early for the holidays and if a normalization was expected. He also asked about plans to regain share in Video Collaboration and improve performance in China.

Answer

CEO Hanneke Faber and CFO Matteo Anversa confirmed the inventory build was an intentional strategy to avoid stockouts and position well for the holidays, with the sell-in versus sell-through dynamic expected to reverse in the second half. Regarding Video Collaboration, Faber highlighted the company's #1 position in units, strong service bookings growth, and product innovation like Smart Switching. For China, she pointed to a robust gaming market and early 'green shoots' from targeted investments that are beginning to yield share gains in key e-commerce channels.

Samik Chatterjee asked about the magnitude of the implications for Celestica from the digital native customer ramp expected in 2027, relative to the current enterprise business, and the capacity planning for this ramp. He also inquired if the growth acceleration in 2027 is expected to be higher than 2026, considering the digital native customer and 1.6T ramps.

Answer

Mandeep Chawla (CFO) expressed excitement about the digital native customer engagement, with mass production expected in 2027, and noted that 2026 guidance does not include meaningful revenue from this opportunity. He estimated it would be multiple billions of dollars in the first year, pending silicon availability and treatment. Jason Phillips (President of Connectivity and Cloud Solutions) highlighted the 'healthy competition' for Celestica's largest customer in the next two to three years. Mandeep Chawla clarified that while 2027 numbers are not yet provided, the CCS business has grown about 40% in 2024, 2025, and is projected for 2026, suggesting at least 40% into 2027, with ATS growth resuming at high single digits in 2027.

Samik Chatterjee asked about the magnitude of the digital native customer ramp expected in 2027 relative to the current enterprise business and Celestica's capacity planning for this. He also inquired if the growth acceleration in 2027 is expected to be higher than 2026, considering new program ramps and the digital native customer.

Answer

Mandeep Chawla (CFO) stated that mass production for the digital native customer is expected in 2027, with initial samples in mid-2026, and the 2026 outlook does not include meaningful revenue from this. He estimated it could be multiple billions of dollars in the first year, pending silicon treatment. Capacity planning for this is included in next year's CapEx. Jason Phillips (President of Connectivity and Cloud Solutions) noted healthy competition for Celestica's largest customer in the next 2-3 years. Mandeep Chawla further clarified that while 2027 numbers are not formal, a 40% CCS growth extrapolation is fair, with potential for acceleration from the digital native win and other hyperscaler programs, and ATS growth resuming at high single digits in 2027.

Samik Chatterjee questioned the drivers behind the substantial increase in the full-year CCS guide, asking if it was due to enterprise recovery, 800g strength, or 400g resilience. He also asked if the implied Q4 growth rate is a sustainable pace for 2026.

Answer

CFO Mandeep Chawla clarified that the enterprise AI/ML program is ramping as expected and will return to growth in Q4, while the communications upside is driven by the acceleration of 800g programs. Regarding 2026, he stated it's too early for a full-year number but noted that hyperscaler demand looks strong into H1 2026. President and CEO Rob Mionis added that the company has the capacity to support growth north of 20%.

Samik Chatterjee questioned the impact of tariffs, specifically the 'minor adjustments' in the ATS segment, and sought clarification on the flat sequential revenue guidance for the Communications sub-segment in Q2 despite accelerating 800G ramps.

Answer

President and CEO Rob Mionis explained that the tariff impact on the ATS segment is muted, with the 'minor adjustments' involving some dual-sourced product migration from Asia to Mexico, offset by share gains in Mexico, resulting in a net-flat impact. CFO Mandeep Chawla addressed the Q2 Communications guidance, stating the flat sequential revenue is due to program timing and material availability, not a change in demand, and emphasized the strong year-over-year growth.

Samik Chatterjee inquired about F5's market share dynamics given the potential first-half impact from the breach, asking if a catch-up in the second half is expected, particularly for systems. He also requested more details on standalone security revenues, noting their consistency around $463 million for FY25 without significant growth over the past few years.

Answer

François Locoh-Donou, President and CEO, expressed expectations for F5 to continue gaining market share long-term due to roadmap investments, aggressive security investments, and commitment to customer trust, despite a potential short-term blip. Cooper Werner, EVP and CFO, explained that while overall security grew 6%, standalone security's consistency reflects customer preference for consuming security via the platform (flexible consumption, attaching security to existing footprint) rather than standalone solutions, and some impact from SaaS transitions.

Samik Chatterjee asked about potential market share dynamics changing due to the first-half impact and if delayed spend from customers might catch up in the second half, particularly for the systems business. He also inquired about the consistent standalone security revenues ($463M for FY2025, similar to prior years) and why there hasn't been more significant growth in this area.

Answer

François Locoh-Donou (President and CEO, F5) expressed confidence in continued market share gains in the app delivery and security market over time, citing F5's aggressive investment in roadmap and security, and commitment to being a trusted partner. He acknowledged a potential short-term blip in the first half but expects long-term strengthening of market position. Cooper Werner (EVP and CFO, F5) explained that standalone security revenue consistency reflects a customer preference to consume security via the platform and consolidate multiple functions, attaching more security to existing footprints, rather than through standalone solutions. He also noted a minor impact from the SaaS transition of legacy offerings.

Samik Chatterjee from JPMorgan Chase & Co. sought assurance that the strong hardware revenue was not due to a pull-forward ahead of potential tariffs, asking which products were driving the growth. He also inquired about the reasons for the sequential step-down in perpetual software revenue and its implications for customer engagement.

Answer

President and CEO François Locoh-Donou confirmed there was no evidence of a hardware pull-in during Q2. EVP and CFO Cooper Werner added that the decline in perpetual software revenue was in line with normal seasonality, as Q1 is typically stronger due to service provider budget cycles, and does not reflect a change in customer engagement.

Samik Chatterjee of JPMorgan Chase & Co. asked for assurance that the strong hardware revenue was not due to a pull-forward of purchases ahead of potential tariffs. He also questioned the drivers behind the sequential step-down in perpetual software revenue and what it indicates about customer engagement.

Answer

CEO François Locoh-Donou stated definitively that F5 did not see any hardware pull-in during Q2, noting the company recognizes such patterns and none were present. CFO Cooper Werner added that the perpetual software revenue was within the typical range for Q2, explaining that the sequential decline from Q1 was expected as Q1 is seasonally stronger for perpetual purchases, particularly from service providers.

Inquired about the specific triggers for the current hardware refresh cycle and F5's relative exposure to AI training versus inferencing.

Answer

The hardware refresh is driven by both a general data center revitalization for AI/hybrid cloud and F5-specific factors like pent-up demand and upcoming end-of-support dates. In AI, F5's primary opportunity is in data delivery for inferencing (RAG), which is less dependent on the scale of training model build-outs.

Samik Chatterjee asked for details on the strong Q4 software performance drivers and questioned why the FY25 software growth guidance implies a deceleration despite AI tailwinds.

Answer

EVP and CFO Frank Pelzer attributed the Q4 software outperformance to strong expansion within the renewal base and new business from previously delayed projects. SVP of Finance and incoming CFO Cooper Werner added that customers also consumed more new offerings upon renewal. President and CEO François Locoh-Donou explained the FY25 guidance is based on the established hybrid multi-cloud trend, not significant AI contributions, which he views as a fiscal '26 and beyond opportunity. He noted that AI is creating new hardware and software insertion points, but the company remains prudent in its forecast.

Samik Chatterjee asked about the overall landscape improvement in non-IT Data Comm markets (industrial, communication networks) compared to 90 days ago, and the visibility provided by book-to-bill in those specific end markets.

Answer

CEO Adam Norwitt confirmed an incrementally more positive view across the company, with strong double-digit organic growth in most end markets, even excluding IT Data Comm. He noted favorable book-to-bills in markets like defense, indicating improved visibility.

Samik Chatterjee asked for an update on Amphenol's outlook for non-IT Data Communications end markets, specifically inquiring if the landscape has improved over the last 90 days and how book-to-bill ratios in those segments (e.g., industrial, communication networks) are impacting future demand visibility.

Answer

CEO Adam Norwitt expressed a "more positive view" on the overall market landscape compared to 90 days prior, citing 10% sequential growth and double-digit organic growth across nearly all end markets. He noted that even without IT Data Communications, organic growth would be in the mid-teens. He also indicated favorable book-to-bill ratios in segments like defense, contributing to improved visibility and strong sequential growth expectations for defense and commercial aerospace in Q4.

Samik Chatterjee from J.P. Morgan noted the unexpected strength in the mobile devices segment and asked if, outside of AI, any other markets were experiencing demand pull-aheads that could explain the near-unity book-to-bill ratio.

Answer

President & CEO R. Adam Norwitt clarified that Q2 mobile device strength was due to strong execution, not a pull-ahead like in Q1. He stated there were no other notable pull-aheads and that book-to-bill ratios were clustered near 1.0 across most markets, with defense being slightly stronger and IT Datacom slightly lower due to the outperformance in shipments.

Samik Chatterjee of JPMorgan Chase & Co. asked about the visibility for continued sequential growth in the IT Datacom business and the potential long-term impact of key customers adopting technologies like co-packaged optics.

Answer

CEO Adam Norwitt stated that while guidance is limited to one quarter, Amphenol's strong, broad position with customers across the AI stack provides confidence. Regarding technology shifts, he declined to comment on specific customers but emphasized that new architectures are becoming more interconnect-intensive overall, creating opportunities for Amphenol's broad portfolio of copper, power, and fiber optic solutions.

Samik Chatterjee asked about the implications of increasing complexity in AI connectors, focusing on Amphenol's market share, long-term content opportunities, and generational product trends.

Answer

CEO R. Norwitt explained that increasing complexity is highly beneficial for Amphenol. He noted that AI systems require high-speed, low-latency, and power-efficient interconnects to link processors, which plays directly to Amphenol's strengths. The company's products address both performance and power consumption challenges, positioning Amphenol to capture more than its fair share of the expanding interconnect opportunity in AI, regardless of specific customer architectures.

Samik Chatterjee followed up on the AI topic, asking about content growth visibility in next-generation systems and Amphenol's strategic positioning between copper and fiber optic solutions.

Answer

CEO R. Norwitt explained that the mesh architecture of AI systems fundamentally increases the role and value of interconnects. He noted that while Amphenol is strong in both copper and fiber, a key value proposition is extending the performance of copper to meet high-speed demands, as it offers significant power consumption advantages over optical solutions.

Samik Chatterjee inquired about the visibility driving Penguin Solutions' expectation for a stronger second half of the fiscal year compared to the first, and whether this is primarily due to Advanced Computing or memory. He also asked about the extent to which the 10%-20% growth guidance for the memory segment is pricing-driven and the margin implications of commodity price changes.

Answer

Nate Olmstead, SVP and CFO, addressed the memory question first, explaining that while increasing memory prices affect their portfolio, Penguin Solutions generally operates on a value-add basis, passing along price increases without significant additional margin. He noted that some price increase is likely factored into the high end of the memory growth range. For the stronger second half, Nate Olmstead attributed it mostly to the AI business, reflecting a strong pipeline and opportunities expected to convert into bookings and revenue later in the year.

Samik Chatterjee inquired about the visibility driving the expectation for a stronger second half of the fiscal year, specifically if it's primarily Advanced Computing or memory-driven. He also asked about the 10-20% memory growth guidance, how much is pricing-driven, and the margin implications of commodity price changes.

Answer

Nate Olmstead, SVP and CFO, stated that the stronger second half primarily reflects the AI business, driven by a strong pipeline expected to convert into bookings and revenue later in the year. Regarding memory, he explained that while rising commodity prices increase revenue, Penguin Solutions generally operates on a value-add basis, passing along price increases without significant additional margin. He noted that some price increase is factored into the high end of the memory range, and the company has good visibility into the first half memory backlog.

Samik Chatterjee of JPMorgan Chase & Co. asked for details on the customer mix for the upcoming Advanced Computing deployments, specifically inquiring about any rotation towards neo-cloud clients. He also probed for an early outlook on the Advanced Computing segment's growth prospects for fiscal year 2026.

Answer

President & CEO Mark Adams highlighted that recent strength in Advanced Computing has come from the federal, energy, and biotech sectors, in addition to the neo-cloud segment, and noted rising interest from financial services. However, Adams declined to provide any guidance for fiscal year 2026, citing the dynamic market environment and uncertainties like tariffs.

Samik Chatterjee of JPMorgan Chase & Co. requested more detail on the customer mix for the Advanced Computing deployments expected in Q4, particularly the contribution from neo-cloud clients. He also attempted to get an early outlook on the puts and takes for Advanced Computing growth in fiscal 2026.

Answer

Mark Adams, President & CEO, highlighted that recent strength and inbound interest for Advanced Computing solutions have come from the federal, energy, biotech, and financial services sectors, in addition to the neo-cloud segment. However, Adams declined to provide any guidance or commentary on fiscal 2026, citing the dynamic market environment, including uncertainties like tariffs.

Samik Chatterjee of JPMorgan Chase & Co. requested color on the magnitude of the 125 AI deals won in the quarter and whether the pipeline suggests an acceleration in wins. He also asked about visibility into the back-half revenue acceleration required to meet the full-year guidance.

Answer

CEO George Kurian stated that AI wins vary widely in scale, from smaller proofs-of-concept to very large model training and RAG environments, and he expects the number of wins to grow steadily. Regarding the full-year guide, he expressed confidence but emphasized a quarter-at-a-time approach due to the dynamic environment, noting that the headwind from the U.S. public sector will lessen in the second half of the year.

Samik Chatterjee of J.P. Morgan asked for details on the size of recent AI deals and whether the pace of AI wins would accelerate. He also inquired about the visibility into the second-half revenue acceleration implied by the full-year guidance.

Answer

CEO George Kurian described AI wins as ranging widely from smaller proofs-of-concept to large-scale deployments and expects the number of wins to grow steadily. Regarding the second half, he expressed confidence but preferred to take it a quarter at a time, confirming that NetApp is working on several large deals that could contribute to the full-year results.

Samik Chatterjee of JPMorgan Chase & Co. asked whether the cautious guidance was informed by continued deal slippage or a more proactive stance on the macro environment. He also requested the Q4 public cloud revenue growth rate excluding the divested SPOT business and the outlook for fiscal 2026.

Answer

CEO George Kurian clarified that the caution is due to the overall macro backdrop, including political instability and uncertainty around trade policies, rather than deal slippage, noting a strong Q4 close. He stated that public cloud revenue, excluding SPOT, grew 22% year-over-year in Q4, with the full-year growth at 16%. He highlighted that first-party and marketplace cloud storage, growing over 40%, will continue to drive acceleration.

Samik Chatterjee of JPMorgan Chase & Co. asked whether the cautious guidance stems from ongoing deal slippage or a more proactive assessment of the macro environment. He also requested the underlying Q4 growth rate for public cloud revenue excluding the divested SPOT business and the outlook for fiscal 2026.

Answer

CEO George Kurian clarified that the caution is based on the broader macroeconomic backdrop, including political instability and lower GDP growth, rather than deal slippage, highlighting a strong Q4 close. He stated that public cloud revenue, excluding SPOT, grew 22% year-over-year in Q4, with the highly differentiated first-party and marketplace services growing over 40%, which is expected to drive future acceleration.

Samik Chatterjee of JPMorgan Chase & Co. asked if the deal slippage mentioned in the previous quarter was continuing and informing the cautious macro outlook. He also requested the Q4 public cloud revenue growth rate excluding the divested SPOT business and the growth expectations for fiscal 2026.

Answer

CEO George Kurian clarified that the caution is more proactive, based on general political instability and reduced GDP growth forecasts, rather than continued deal slippage from Q3, as most of those deals closed in a strong Q4. He stated that public cloud revenue, excluding SPOT, grew 22% year-over-year in Q4 and 16% for the full year, with the fast-growing first-party and marketplace services expected to continue driving momentum in fiscal 2026.

Samik Chatterjee asked for an update on NetApp's disaggregated storage solution and its addressable market, and also inquired about the company's strategy for software-only deals with hyperscalers.

Answer

CEO George Kurian confirmed good progress on its third-generation disaggregated storage, positioning it to compete with other large NAS incumbents, with more details to be shared later. Regarding hyperscalers, he emphasized that NetApp has been providing high-value, high-margin, full-stack solutions since 2019 and will continue to expand its use cases on their platforms.

Samik Chatterjee questioned the commentary on an 'uncertain macro' environment given the strong results, and asked about the expected contribution from AI-specific workloads to fiscal 2025 revenue.

Answer

CEO George Kurian clarified that while performance is strong, geopolitical risks and interest rate uncertainty persist. He noted customers are prioritizing strategic projects like AI but are not yet committing to large-scale infrastructure refreshes. For AI, he explained that customers are increasingly using hybrid workflows, and NetApp is well-positioned to capture this demand. He expects the cloud segment to return to consistent growth as subscription headwinds lessen.

Samik Chatterjee inquired about the fiscal 2026 growth outlook for Coherent's data center business and sought an update on the 6-inch indium phosphide platform ramp, including customer interest in U.S. manufacturing and the impact of the new Apple agreement.

Answer

CEO Jim Anderson confirmed strong demand signals for the data center and communications segment, expecting sequential growth driven by 800G, 1.6T, and OCS products. He announced that production on the world's first 6-inch indium phosphide line began in August, providing significant cost and volume advantages. Anderson highlighted the expanded multi-year partnership with Apple for next-generation VCSELs, with revenue expected in H2 2026, as a key proof point of the strategic value of Coherent's U.S. manufacturing footprint.

Samik Chatterjee asked about the revenue timing and material impact of new products announced at the Optical Fiber Communications (OFC) conference, and inquired about the company's manufacturing flexibility and supply chain resilience in the context of the current tariff environment.

Answer

CEO James Anderson stated that the 1.6T transceiver ramp is expected to begin this calendar year, with the 400G EML being a key milestone for future 3.2T products. Regarding tariffs, Anderson explained that Coherent does not expect a significant impact due to its diverse global manufacturing footprint of over 60 facilities across 14 countries, with roughly half in the U.S. He noted this provides adaptability, though the company is taking a more cautious near-term view on its industrial business due to general macro uncertainty.

Samik Chatterjee of JPMorgan Chase & Co. asked about the sustainability of the telecom market's recovery and requested more details on the new Optical Circuit Switch (OCS) customer win, including its addressable market and revenue ramp.

Answer

CEO James Anderson responded that the company's outlook on the telecom market has improved from 'cautious to cautiously optimistic,' citing two consecutive quarters of growth driven by data center interconnect and new product ramps. Regarding OCS, he highlighted its differentiated liquid crystal technology and confirmed the first customer order. Anderson stated that initial revenue is expected in calendar 2025, with a more material contribution in 2026 and beyond, promising more details at the upcoming Investor Day.

Samik Chatterjee asked for feedback new CEO James Anderson has received from key customers and partners, and inquired about the primary drivers for the gross margin trajectory through the fiscal year.

Answer

CEO James Anderson stated that the key opportunity with customers is to build more strategic, multi-generational relationships, leveraging Coherent's broad technology portfolio and resilient supply chain. CFO Sherri Luther explained that Q1 gross margin expansion was driven by higher revenue volume, favorable product mix, and yield improvements. She reiterated the long-term goal of achieving a gross margin above 40% through ongoing pricing optimization and product cost reduction initiatives.

Samik Chatterjee of JPMorgan Chase & Co. inquired about the strategic reinvestment plan's impact on the goal to exit 2026 with a Rule of 40, and asked for clarification on the Q3 guidance's seasonality.

Answer

CFO David Rudow clarified that the reinvestment plan realigns resources to accelerate growth in enterprise and channel while improving SMB efficiency, with the Rule of 40 target for year-end 2026 remaining firm. He explained that Q3 guidance appears to have lower seasonality because certain revenues were pulled into Q2; excluding these, the ramp would be more typical. He also noted Q3 is a seasonally strong quarter for the newly acquired Identity Automation business.

Samik Chatterjee asked about the typical sales cycle for the new Data Center Building Block Solutions (DCBBS), customer interest, and the timeline for material revenue contribution. He also questioned if the company can return to its long-term gross margin target of 14-17%.

Answer

CEO Charles Liang detailed that DCBBS components are shipping now, with higher volumes expected in the December quarter. He affirmed that the 15-17% gross margin range remains the long-term target, driven by higher-margin enterprise business and value-added solutions like DCBBS. CFO David Weigand added that they are already providing these types of services to large customers.

Samik Chatterjee inquired about the prudence in the Q4 revenue guidance, asking if customer order trends have recently weakened due to macro factors. He also questioned the cautious gross margin outlook, probing whether it stems from pricing pressure on older Hopper products or the transition to new Blackwell platforms.

Answer

CEO Charles Liang stated that despite macro and tariff concerns, orders are strong for the June quarter, driven by the Blackwell platform now being in volume production. CFO David Weigand attributed the cautious gross margin guidance to a combination of tariff uncertainty and the technology changeover, where older platforms face more price competition.

Samik Chatterjee questioned if the $40 billion fiscal 2026 revenue target accounts for potential shifts in customer behavior during future NVIDIA product transitions, similar to what may have impacted past sequential growth. He also asked for management's confidence level in achieving the target based on current customer engagements versus the need to acquire new ones.

Answer

CEO Charles Liang expressed confidence, drawing a parallel between the current Blackwell launch and the successful H100 launch in 2023. He highlighted Super Micro's lead in liquid cooling technology and expanding capacity as key advantages. Liang noted that growth is also expected from expanding market share in Asia and Europe. He asserted that the $40 billion forecast is a conservative estimation, supported by customer demand, backlog, and commitments, and that recent growth was only slowed by the temporary 10-K filing delay.

Samik Chatterjee inquired about the drivers behind the sequential gross margin decline in the forecast after a strong quarter, the viability of the 14-17% long-term margin target, and any planned management changes to improve financial reporting controls.

Answer

CEO Charles Liang explained that new GPU generations typically provide an opportunity to improve profitability and that the company's complete Data Center Building Block Solutions will also help gradually grow margins. He added that as a fast-growing company, they continuously evaluate adding senior management, guided in part by the special committee's recommendations.

Samik Chatterjee inquired about the content per vehicle on new wins with local Chinese OEMs and the strategy for allocating incremental R&D dollars, especially with a potential market shift towards hybrid vehicles.

Answer

CFO Andrew Lynch explained that new wins in China are aimed at bringing content with local OEMs up to parity with multinational ICE vehicles, neutralizing a historical headwind. CEO Stephan von Schuckmann added that R&D dollars are being selectively focused on Chinese NEV applications, industrial products like gas leak detection, and aerospace growth opportunities.

Samik Chatterjee asked for a second-half outlook on the heavy truck (HVOR) and industrial markets, and questioned if automotive customers were delaying decisions on new business wins due to macro uncertainty.

Answer

Chief Executive Officer Stephan Von Schuckmann stated that the HVOR market outlook has worsened, while the industrial business shows solid stability. He explained that customer decisions are a mixed picture: some electrification projects are being postponed, but in regions like China, EV platform projects are accelerating.

Samik Chatterjee asked about the optimal level of automotive production outgrowth Sensata should target and how it would balance growth versus margins, including any new thoughts on portfolio rationalization. He also requested clarification on the Mexico tariff exposure regarding product distribution.

Answer

Chief Financial Officer Brian Roberts clarified that Sensata uses a maquila structure, importing most Mexico-made products into the U.S. before distribution, but could adjust if needed. He reiterated the historical 3-6% outgrowth range remains valid. Chief Executive Officer Stephan Von Schuckmann added that from his perspective, a low-to-mid single-digit outgrowth is the right level to target.

An analyst on behalf of Samik Chatterjee asked for an expansion on the delays in electrification programs, the impact on the 2026 revenue target, and any early outlook for 2025 end markets.

Answer

Executive Martha Sullivan identified North America and Europe as the primary regions for electrification delays. She noted Sensata is hedged by its strong ICE and hybrid content and remains bullish long-term, but is aligning its spending with market timing. For 2025, she stated the company expects no market help through at least the first half of the year.

Samik Chatterjee asked about the performance of the SpringBoard plan, noting that results are tracking closer to the internal plan and questioning if any areas have underperformed. He also sought details on the emerging opportunity for customers to leverage Corning's U.S. manufacturing footprint.

Answer

Chairman & CEO Wendell Weeks stated that while confidential, negotiations are underway with major customers to utilize Corning's 34 U.S. factories. Regarding the SpringBoard plan, he noted that stronger-than-expected new product adoption has more than offset slower areas like foldable device technology, and overall momentum is building.

Samik Chatterjee asked about the performance of the SpringBoard plan, noting it's tracking closer to the internal plan, and questioned if any areas have underperformed. He also sought details on the opportunity from customers leveraging Corning's U.S. manufacturing footprint.

Answer

CEO Wendell Weeks explained that stronger-than-expected new product adoption is offsetting slower areas, such as a delay in foldable device tech. Regarding U.S. manufacturing, he noted confidential negotiations are underway with major customers across several markets, with more details expected in the coming months. He reiterated that the company is hitting or exceeding its critical SpringBoard milestones.

Samik Chatterjee of JPMorgan Chase & Co. asked about customer conversations following recent tariff announcements, whether recession fears are a more frequent topic, and the flexibility of the solar investment plan in a potential downturn.

Answer

Chairman and CEO Wendell Weeks responded that customer talks are centered on increasing demand for Corning's U.S.-made products. EVP and CFO Ed Schlesinger added that the solar business is somewhat insulated from macro trends due to the fundamental need for energy and increasing demand for U.S.-sourced products. He highlighted that capacity is largely sold out with long-term, take-or-pay agreements, providing stability. Weeks emphasized the strategy is focused on import substitution, which is aided by current trade dynamics.

Samik Chatterjee asked for details on the incremental opportunity from the new AT&T agreement and whether a fundamental change in fiber utilization is driving a new investment cycle.

Answer

CEO Wendell Weeks explained that the AT&T deal is an encouraging cyclical trend for the carrier segment, aligning with the Springboard plan, but it's too early to declare a full recovery. He noted that the generative AI opportunity, exemplified by the Lumen deal, is creating demand to interconnect data centers, which is filling fiber links and could become a significant, distinct growth driver.

An analyst on for Samik Chatterjee asked about the strategy behind Mobileye's recent imaging radar deal, questioning if the company would sell more individual components, and requested a ranking of the biggest revenue drivers for the expected 2027 ramp across Supervision, Chauffeur, and DRIVE.

Answer

CEO Amnon Shashua clarified that the imaging radar is a strategic sensor and the one-off deal was to build credibility. He stated the future strategy is to sell it as part of a bundled Eyes-Off system (Chauffeur/DRIVE), not as a standalone component. Regarding 2027, he confirmed a significant ramp but declined to rank the products, while CCO Dan Galves added that the expectation for DRIVE to be a significant contributor in 2027 is a new development.

Samik Chatterjee questioned the modest deceleration in RPO growth despite a significant acceleration in revenue, asking if platform attach rates were different. He also requested an update on the supply chain and the manufacturing move to Mexico.

Answer

CEO Michael Weening explained that RPOs reflect minimum commitments, and revenue from customers exceeding those minimums flows directly to the P&L, causing lumpiness. CFO Cory Sindelar added that Q2 revenue acceleration was driven by strong appliance demand from new customers. Regarding the supply chain, he stated the environment is stable and the move to Mexico will take 9-18 months, with no immediate changes needed.

Samik Chatterjee asked for clarification on the Q2 guidance, specifically how the large customer pull-forward is factored in, and questioned the source of confidence in long-term growth despite quarterly lumpiness. He also asked about the status of BEAD-related discussions.

Answer

CFO Cory Sindelar explained that while the large customer's Q1 run rate is not expected to continue, the demand is being backfilled by broad-based strength across other customer segments. CEO Michael Weening added that the company has strong visibility into customer demand. Regarding BEAD, Sindelar noted that while the front end has slowed, the program is not factored into their forecast, and rules are expected to be finalized soon.

Speaking for Samik Chatterjee, Joe Pertos of JPMorgan Chase & Co. asked if the high number of BEAD state approvals was ahead of schedule, implying a potential revenue pull-forward into 2025. He also questioned the drivers behind recent large platform and cloud deals and the sustainability of that pipeline's momentum.

Answer

CFO Cory Sindelar stated that the BEAD approval timeline is in line with their expectations, not a pull-forward. CEO Michael Weening attributed the large deal momentum to a market disruption forcing providers to differentiate beyond speed and become 'experience providers.' Sindelar added that strong RPO growth also reflects successful long-term customers renewing and expanding contracts, often at 2.5x the original value.

Samik Chatterjee asked if the sluggish growth guided for the Regulated and Connected Living segments in Q4 is expected to persist over the next year, and sought clarity on the financial breakdown of the $500M U.S. investment and its strategic implications for Jabil's global manufacturing footprint.

Answer

CFO Greg Hebard confirmed the Q4 guidance for those segments is prudent due to softness in EV, renewables, and consumer markets. However, CEO Mike Dastoor highlighted future growth drivers in healthcare and digital commerce. Regarding the investment, Dastoor clarified the $500M is a long-term figure and will not change the company's overall CapEx target of 1.5-2% of revenue, and that no major restructuring of its regionalized global footprint is planned.

Samik Chatterjee from JPMorgan Chase & Co. asked about the significant positive shift in the Intelligent Infrastructure segment's performance and the drivers behind the increased confidence and $1 billion raise in AI guidance. He also questioned the factors causing margin weakness in the Connected Living & Digital Commerce segment and the strategy for improving its profitability.

Answer

Chief Executive Officer Mike Dastoor attributed the Intelligent Infrastructure strength to momentum in semi-cap equipment (automated testing) and cloud data center infrastructure, which he stated is accelerating, not slowing. Regarding Connected Living margins, Dastoor explained that year-over-year comparisons are skewed by the Mobility divestiture and that Q2 reflects typical post-holiday seasonality. He expressed optimism for future growth from digital commerce and automation.

Samik Chatterjee asked about the drivers behind the significant revenue acceleration in the Intelligent Infrastructure segment and the increased confidence in the AI outlook. He also questioned the margin weakness in the Connected Living & Digital Commerce segment.

Answer

CEO Mike Dastoor attributed the Intelligent Infrastructure strength to robust demand in semi-cap equipment for automated testing and accelerating momentum in cloud data center infrastructure. Regarding the Connected Living & Digital Commerce segment, Dastoor explained that margins were impacted by the comparison to the prior year which included the divested Mobility business, as well as typical post-holiday seasonality. He highlighted future growth drivers in digital commerce and warehouse automation.

Asked why operating margin guidance wasn't raised along with revenue, the potential impact of a U.S. EV tax credit repeal, and for more detail on the drivers of the strong cloud and AI outlook.

Answer

The company believes its margin guidance is appropriate, not conservative. The potential repeal of the U.S. EV tax credit is expected to have a small impact as it's already factored into a cautious EV forecast. The AI business growth is primarily driven by cloud and data center infrastructure ($900M), followed by capital equipment ($400M) and networking/photonics ($200M).

Representing Samik Chatterjee, an analyst asked why the operating margin outlook for FY25 remained similar despite higher revenue guidance, the potential impact from a repeal of U.S. EV tax credits, and which specific products are driving the growth in the cloud and AI outlook.

Answer

CEO Mike Dastoor described the margin guidance as "appropriate" rather than conservative. He assessed the potential impact of an EV tax credit repeal as "small," noting Jabil wasn't forecasting huge EV growth to begin with. Dastoor detailed that the $1.5 billion year-over-year increase in AI-driven revenue is composed of approximately $900 million from cloud/data center, $400 million from capital equipment, and $200 million from networking and photonics.

Inquired about the revenue scale needed to achieve the long-term 6% margin target, whether to expect continuous portfolio rationalization, and the specific drivers for the margin ramp throughout fiscal 2025.

Answer

Management estimates a revenue range of $30 billion to $35 billion is needed to reach the 6% margin target, achievable through a combination of gross margin improvement and SG&A efficiency. While small portfolio rationalizations are ongoing, no major exits are expected. The margin ramp in FY25 is driven by normal EMS seasonality (stronger second half), a favorable business mix from new program ramps, and operational leverage, rather than an optimistic market recovery.

Samik Chatterjee of JPMorgan Chase & Co. inquired about the acceleration of cloud customer orders during the quarter, the sustainability of this demand into fiscal 2026, and the gross margin impact from ramping new products like pluggables.

Answer

President and CEO Gary Smith confirmed a "step function" in cloud demand that exceeded expectations and is driving strong order momentum into Q3. He noted this is a long-term trend that will likely cause Ciena to revise its three-year outlook later. CFO Jim Moylan and Executive Advisor Scott McFeely addressed margins, explaining that while new, high-demand products like RLS and pluggables are currently below corporate average margins, they expect costs to decline and mix to improve over time, supporting a return to mid-40s gross margins and mid-teens operating margins.

Samik Chatterjee asked about the expected interplay between orders and backlog in fiscal 2025 and questioned the assumptions behind the Total Addressable Market (TAM) growth figures presented.

Answer

CFO Jim Moylan indicated that while order flow is expected to be very strong, the future of the backlog level is uncertain as lead times normalize, making order flow a more important metric to watch. CEO Gary Smith added that less seasonality is expected due to higher cloud exposure. Regarding TAM, management explained the figures are from third-party analysts. They believe Ciena will continue to outgrow the core market by taking share, and that current analyst models may not fully capture the growth from MOFN and other cloud-driven infrastructure builds.

Samik Chatterjee requested a breakdown of the order improvement between cloud and service providers, and asked how AI-driven investment from webscalers is being allocated between pluggables and traditional systems.

Answer

CFO Jim Moylan clarified that current order flows are predominantly driven by webscalers, with backlog growing to $2.1 billion. He expects improvement from North American service providers soon, with international providers lagging. Executive Adviser Scott McFeely explained that pluggables address the short-reach metro DCI market, which is incremental revenue for Ciena. CEO Gary Smith added that the vast majority of cloud spending will continue to be on complex, high-performance optical systems for core and submarine networks.

Samik Chatterjee inquired about the specific drivers of the strong Print segment operating margins in Q2 and questioned why Q3 margin guidance was more moderate despite expectations for above-seasonal revenue growth.

Answer

The provided transcript did not contain the full response to this question. However, earlier in the call, CFO Karen Parkhill attributed strong Q2 Print margins to "rigorous cost discipline and pricing actions, as well as the favorable impact of grant funding received in the quarter." This likely forms the basis of the Q2 outperformance.

Samik Chatterjee of JPMorgan Chase & Co. asked for the basis of confidence in the FY25 commercial PC refresh, given recent enterprise hesitation. He also sought clarification on whether Q1 revenue seasonality would differ from the norm.

Answer

CEO Enrique Lores cited the 5% commercial revenue growth in Q4 as evidence of momentum. He noted the slower start to the Windows 11 refresh creates a larger opportunity for 2025, driven by the hard deadline for Windows 10 support. CFO Karen Parkhill added that for Q1, revenue is expected to grow year-over-year, with strength in Personal Systems offsetting a decline in Print, and that the EPS ramp through the year is driven by PC seasonality, margin actions, and higher AI PC penetration in the second half.

Samik Chatterjee of JPMorgan Chase & Co. inquired about the adoption of AI PCs across consumer and commercial segments and asked whether competitive pressures in Print were causing market share loss or were more reflective of underlying market weakness.

Answer

CEO Enrique Lores explained that while AI PC shipments are slightly ahead of forecasts, the material impact is yet to come, with initial adoption expected to be faster in the consumer segment. Regarding Print, he stated that the market recovery was slow, but HP held or grew share by placing profitable units, attributing pricing pressure to competitors leveraging the weak yen rather than a structural loss of position. He noted that supplies performance remains a positive indicator for future demand.

Samik Chatterjee asked about the macroeconomic environment, specifically the divergence between weaker SMB demand and stronger large enterprise spending, and sought details on the product mix between client and advanced solutions for Q1 and the Q2 outlook.

Answer

CEO Paul Bay noted that while SMBs faced headwinds, they were showing year-over-year improvement. He expressed confidence in continued strong demand from large enterprises based on pipeline and partner conversations. Both Bay and CFO Mike Zilis confirmed the Q1 strength in client solutions and a return to low single-digit growth in networking. For Q2, they anticipate continued growth but are taking a conservative view on SMBs, expecting a continued concentration in lower-margin large enterprise customers.

Samik Chatterjee from JPMorgan Chase & Co. asked about the potential impact of tariffs on North American demand and the company's ability to pass on costs. He also questioned the strategy for returning to EPS growth given the competitive pressures.

Answer

CEO Paul Bay noted that while Ingram Micro typically passes through tariff costs, the key variable is the impact on end-user demand. CFO Michael Zilis explained that returning to EPS growth is a 'margin story' dependent on improving the business mix toward higher-value SMB customers and Advanced Solutions, alongside ongoing OpEx optimization.

Samik Chatterjee from JPMorgan Chase & Co. followed up on the rebound discussion, asking for insights into the expected product mix between higher-margin Advanced Solutions and endpoint devices for Q4 and into 2025.

Answer

CEO Paul Bay explained that while Advanced Solutions faced headwinds in Q3, they are projected to return to growth, bolstered by an improving networking segment and continued strength in server storage and cybersecurity. He also highlighted that the cloud business continues its strong growth trajectory, while client and endpoint solutions will be primarily driven by the PC refresh cycle.

Samik Chatterjee from JPMorgan Chase & Co. inquired about the impact of recently announced tariffs on customer purchasing behavior, potential price increases, and any observed order pull-forwards. He also asked about the sustainability of the high CCS segment margins and the status of capacity expansion plans.

Answer

CEO Chuck Treadway stated that the tariff impact is manageable due to CommScope's flexible global footprint, with 80% of U.S. sales being U.S. or USMCA compliant. He estimated a Q2 gross impact of $10-15 million, which will be fully mitigated by Q3 through manufacturing adjustments and supplier base leverage, with minimal order pull-in. CFO Kyle Lorentzen affirmed that the CCS margins are sustainable, supported by fixed cost leverage as revenue grows, and confirmed ongoing capacity investments to meet strong data center demand.

Priyanka on behalf of Samik Chatterjee asked for details on the anticipated 2025 rollout of FDX amplifiers, including the cadence and whether to expect a step-function change in Q2.

Answer

President and CEO Chuck Treadway noted they shipped ~$50 million of FDX amplifiers in Q4 and could ship up to $300 million in 2025, which would partially cannibalize older products. CFO Kyle Lorentzen clarified the cadence, stating Q1 would be light, followed by a strong ramp in Q2 and Q3, with potential for quarterly fluctuations thereafter based on customer installation schedules.

Samik Chatterjee asked for more detail on CCS revenue growth, specifically the divergence between carrier and data center customers, and how the new $300 million capacity would be allocated. He also inquired about the expected headwind from stranded costs post-divestiture.

Answer

CFO Kyle Lorentzen stated that the 17% CCS growth was primarily driven by strong performance in data centers and some growth in the enterprise copper business, while the broadband (carrier) business was relatively flat year-over-year. CEO Chuck Treadway confirmed the new capacity is for data centers. Lorentzen estimated the annual headwind from stranded costs would be approximately $20 million.

Samik Chatterjee asked about the drivers for the 9% decline in post-sale revenue and its expected trajectory, and sought clarification on how free cash flow guidance is being maintained, specifically the balance between core cash flow and benefits from finance receivables.

Answer

President and COO John Bruno explained the post-sale decline was driven by lower supplies and print volumes from a rationalized machine base, but expects trends to improve as recent installation growth pulls through services. CFO Mirlanda Gecaj quantified the core decline at approximately 4% after adjustments and confirmed this trajectory should improve. Regarding cash flow, Gecaj stated the full-year guidance is maintained, with lower benefits from finance receivables being offset by improved operating income and working capital. She confirmed the full-year expectation for finance receivable benefits is unchanged from prior guidance.

Samik Chatterjee of JPMorgan Chase & Co. questioned the drivers behind the projected 400 basis point revenue headwind from "Project Reinvention" in 2025 and its potential continuation into 2026. He also asked for a breakdown of the guided year-over-year decline in 2025 free cash flow.

Answer

An executive explained the 2025 revenue headwind is a continuation of prior years' actions and that the focus is now more tactical, with no expected carryover into 2026. President and COO John Bruno added that foundational simplification work is largely complete. CEO Steven Bandrowczak clarified that remaining reinvention efforts will be rolled into the Lexmark integration. Regarding free cash flow, an executive noted the decline is primarily driven by a planned lower inflow from the sale of finance receivables, partially offset by higher working capital and operating net income.

Samik Chatterjee of JPMorgan Chase & Co. asked about the revenue dynamics between the Durham and Mohawk Valley fabs, questioning if the transition to Mohawk Valley was proceeding slower than expected. He also requested a more specific timeline for achieving the operational milestones required for CHIPS Act funding.

Answer

Executive Chairman Tom Werner confirmed the Durham fab closure is on track for the second half of the calendar year and that a corporate objective is in place to accelerate customer conversions to Mohawk Valley. CFO Neill Reynolds advised against over-analyzing the fab revenue split due to inventory transitions and projected a 20-25% sequential revenue increase for Mohawk Valley. Reynolds also expressed 'very high confidence' in meeting CHIPS operational milestones in early calendar 2025.

Joseph Cardoso, on behalf of Samik Chatterjee from JPMorgan Chase & Co., requested more detail on the revenue ramp-down of the Durham 150mm fab and questioned customer willingness to transition production to the new Mohawk Valley 200mm fab.

Answer

CEO Gregg Lowe explained the transition is to a superior, highly automated 200mm fab, which offers better results and higher quality. He noted that all current powertrain customers are already qualified and shipping from Mohawk Valley. CFO Neill Reynolds added that the Durham fab's revenue will gradually phase out over the next 9-12 months as production shifts, with an expectation for Mohawk Valley's revenue to continue increasing.

Asked about the 2024 operating margin expansion outlook, specifically how much of a revenue decline could be absorbed while still achieving it. He also sought clarification on the Q4 order outlook, noting a seemingly more cautious tone compared to the previous quarter.

Answer

Operating margin expansion is expected in 2024, driven by gross margin improvements and prudent cost controls, which can be achieved even with a modest revenue decline. For Q4 orders, while a return to year-over-year growth is still possible, the base case is now for a significantly lessened decline rather than guaranteed growth. A return to year-over-year order growth is expected in early 2024.