Axcelis, a Massachusetts maker of the ion implantation machines used to build semiconductors, spent the whole of 2025 in a downturn and is now testing whether the recovery is real. Revenue fell from $1.13 billion in 2023 to $1.02 billion in 2024 to $839 million last year, then clicked back up in the first half of 2026. Fiscal-second-quarter revenue rose 10.6% year over year to $215.2 million, the strongest comparison of the emerging cycle, and management now expects year-over-year growth for the full year with momentum carrying into 2027. But there are two ways to read this quarter, and the gap between them is the entire story. The accounting read: GAAP earnings per share fell to $0.75 from $0.98, driven up by costs tied to the pending merger with Veeco Instruments that Axcelis announced last fall. The operational read: the growth is real and broad, led by a 35% jump in aftermarket revenue for spare parts and service as customer fabs run fuller - while new-system shipments stayed essentially flat.
The crux is the merger. Axcelis agreed in late 2025 to buy Veeco, a deposition-and-etch equipment maker, in a stock deal that shareholders approved in February and that awaits a final Chinese regulatory approval, targeted to close in the second half of 2026. Management is funding the deal softly - the company has effectively stopped repurchasing stock while it closes, and it is spending several million dollars a quarter on transaction costs that depress reported earnings. The falling share count of prior years (buybacks returned more than $60 million in 2025 alone) has gone quiet ahead of the close. What decides the thesis is whether the merger closes on schedule and whether the aftermarket-led upswing converts into system sales - the memory and power semiconductor demand the company says is turning. The shares sit around $135, roughly 28 times forward earnings, about a 15% discount to large-cap semiconductor equipment peers, with the discount itself a price tag on deal-and-cycle risk.