Camtek (CAMT) Q3 2026 earnings review
Camtek sets an $800M 2027 plan, while gross margin lags
Camtek, which makes machines that inspect semiconductor wafers for defects, turned its surge of packaging orders into record shipments and cash flow. Third-quarter sales rose 28% from a year ago to $161 million, while operating cash flow rebounded to $71 million after two weak quarters. Chief executive Rafi Amit repeated the October targets of $180 million for the fourth quarter and over $800 million for 2027, above what the prior second-half plan pointed to by our math.
| Revenue | $161.3M +28% from a year ago |
|---|---|
| Operating cash flow | $71.1M $12.2M last quarter |
| Fourth-quarter revenue outlook | ~$180M +40% from a year ago |
| Initial 2027 revenue outlook | >$800M ~35% over 2026 plan |
⚖️ Verdict: 🟢 Bullish
The story got better because the second-half shipment ramp is now showing up in revenue, operating margins, and cash collection at the same time. Putting an $800 million floor on 2027 sales — about 35% growth — extends the current upcycle by a full year. One caution: gross margin excluding one-offs dipped to 51.1%, leaving a steep climb to reach the 52.5% year-end target, and the release gives no dollar backlog.
The question now is whether the 2027 plan marks a lasting step-up in packaging inspection demand or one big wave of factory building that cools off afterward. Either the order book is backed by binding contracts across many chip assemblers, or it relies on non-binding customer forecasts that can be pushed out. Management's order and margin details on the conference call and fourth-quarter gross margin will tell.
🐂 Bull Case
Orders Turn Into an $800 Million Plan
Camtek makes inspection and measurement machines that check semiconductor wafers for defects, especially in advanced packaging — the step that links multiple chips together for artificial intelligence processors. After collecting over $600 million of orders in the first half of the year, the Israeli equipment maker is now shipping those tools and turning its order book into revenue.
- Third-quarter revenue: $161.3 million, up 28% from a year ago and 21% from last quarter
- Fourth-quarter revenue outlook: about $180 million, up 40.5% from a year ago by our math
- Initial 2027 revenue outlook: over $800 million, up about 35% from the 2026 plan
This matters because the fourth-quarter plan sits 5% above the $171.4 million floor that the company's prior second-half outlook pointed to, by our math. Management first shared the 2026 and 2027 targets at an October investor event and repeated them here, "supported by strong order backlog and sales pipeline". Note that the press release does not update the mix of new Eagle G5 and Hawk tools, packaging share, or photonics orders.
What to watch: the conference call breakdown of fourth-quarter and 2027 shipments between high-bandwidth memory and outsourced chip assemblers. A broad split across both groups would show the 2027 ramp does not rely on one customer wave.
Cash Collection Rebounded After Two Weak Quarters
In the first half of 2026, Camtek generated little cash because unpaid customer bills piled up on its balance sheet. In the third quarter, the equipment maker collected those bills and brought in $71.1 million of operating cash flow, more than double the $34.3 million it generated a year ago.
By our math, the share of profit excluding one-offs that turned into operating cash reached 141% this quarter, up from 9% in the first quarter and 31% in the second. Trade accounts receivable — money customers owe for delivered machines — rose 8.0% from last quarter to $166.2 million, growing much slower than the 21.1% jump in sales. One quarter of strong collections eases the working-capital strain, but receivables are still up 47.8% from a year ago.
What to watch: operating cash flow and days of sales outstanding in the fourth quarter as revenue climbs toward $180 million. Another quarter of cash flow above profit would show the early-2026 collection delay is behind the business.
Higher Volume Lifted the Operating Margin
Faster hiring in research and sales weighed on Camtek's profitability during the first half of the year. This quarter, the 21.1% jump in revenue outpaced spending, lifting the operating margin excluding one-offs by 2.5 percentage points from last quarter to 29.5%.
By our math, total operating expenses fell by 4.4 percentage points of revenue from the second quarter, down to 25.3%. Compared with a year ago, the operating margin excluding one-offs is still down 0.4 percentage points because research and development rose by 0.4 percentage points of sales to 11.1%, while selling and administrative costs added 0.1 points to 14.2%. That leaves the margin just half a point below the 30% to 32% year-end target chief financial officer Moshe Eisenberg set last quarter.
What to watch: fourth-quarter operating margin excluding one-offs on the planned $180 million of sales. A reading inside the 30% to 32% range would confirm that higher shipment volume absorbs the larger engineering team.
🐻 Bear Case
Gross Margin Still Lags the Year-End Target
Camtek has counted on its newest inspection machines — the Eagle G5 and Hawk platforms — to lift the profitability of each tool it sells. Last quarter, Eisenberg said the company hoped to exit the year with a gross margin excluding one-offs between 52.5% and 53.0%.
In the third quarter, the gross margin excluding one-offs went the other way, dipping 0.4 percentage points from a year ago and 0.3 points from last quarter to 51.1%. Cost of revenues — the direct cost of parts and factory labor to build the machines — rose to 50.0% of GAAP sales. The release does not give the new-platform sales share for the quarter, so the numbers alone show that product mix has not yet overcome component costs.
What to watch: fourth-quarter gross margin excluding one-offs, which must rise at least 1.4 percentage points in a single quarter to reach the 52.5% floor. Missing that mark while sales hit a record would show that memory and component costs or pricing are capping hardware margins.
Year-Ahead Visibility Lacks a Firm Backlog Number
"For the first time in our history, we have visibility a year ahead giving us confidence in our growth outlook and trajectory," chief executive Rafi Amit said. Amit attributed the growth to "high-end advanced packaging driven by the rapidly expanding demand for AI" and set a 2027 revenue target of over $800 million.
Despite that claim, the earnings release gives no dollar figure for third-quarter order intake or total backlog. In the first half of the year, when management cited over $600 million of year-to-date orders and $260 million from high-bandwidth memory makers, those figures combined firm purchase orders with non-binding customer forecasts. Because the typical delivery lead time for Camtek's machines is three to six months, a full-year 2027 target rests partly on customer plans that can shift if chipmakers pause after the current factory build-out.
What to watch: whether management discloses a dollar backlog or cumulative 2026 order total on the conference call, separated between binding purchase orders and customer forecasts. Without that split, investors cannot tell how much of the $800 million target is contractually locked in.
Risks This Quarter Didn't Answer
Several standing business and external risks received no new numbers in the third-quarter press release.
- Market share against rivals: peers such as KLA have reported fast packaging growth, and the release gives no share figures to test whether Camtek is keeping pace.
- China exposure and trade rules: China was previously planned at about 45% of 2026 sales, and the annual filing's geographic table will show the final share against US export-control risks.
- Middle East shipping and operations: the release again flags hostilities in the Middle East and disruptions around the Strait of Hormuz, though third-quarter deliveries beat the plan.
💲 Other KPIs
By our math, net cash — total cash, bank deposits and marketable securities of $877.1 million minus $489.2 million of convertible debt — rose by $60.6 million from last quarter. Strong third-quarter cash flow rebuilt the balance sheet after the second-quarter acquisition of Visual Layer, generating $7.1 million in net financial income.
By our math, combined short-term and long-term inventory rose 5.3% from last quarter to $123.0 million after falling in the first half, but remains 13.7% below a year ago. Keeping stock lean while preparing for a $180 million fourth quarter helped free up cash this quarter.
Profit per share excluding one-offs rose 20.7% from a year ago and 26.9% from last quarter. On a GAAP basis, diluted profit per share was $0.84 against a $1.16 loss a year ago, when the company recorded an $88.7 million charge to refinance its convertible debt.
🔮 Guidance
Raised against prior second-half floors. The plan calls for about $180 million, up 40.5% from a year ago and 11.6% from the third quarter by our math, repeating the target first given at October's investor event. That beats the $171.4 million floor implied by the earlier second-half plan. If Camtek's four-quarter average beat of 1.6% holds, fourth-quarter sales would land near $182.8 million by our math.
Raised. Full-year sales are planned at about $595 million, or 19.9% growth from 2025 by our math, up from the $586.3 million floor implied by the prior second-half outlook. Combining first-half sales of $254.9 million with the second-half plan brings second-half growth to 33.9% over the first half.
Raised to a dollar floor. Having previously promised continued growth into 2027, the company now sets an initial target of over $800 million, or about 35% growth over the 2026 plan. Note that first-quarter 2027 will compare against a soft $121.7 million quarter in early 2026.
❓ Key Questions
How much of the 2027 plan is firm orders?
In earlier quarters, management's order figures combined binding purchase orders with customer forecasts. Knowing how much of the $800 million target for 2027 is backed by signed purchase orders today will show how protected the plan is if chipmakers delay expansions.
What was cumulative order intake at the end of Q3?
Camtek reported over $600 million in year-to-date orders last quarter but gave no updated dollar figure in this release. The third-quarter booking pace shows whether demand is still accelerating or peaking into 2027 deliveries.
Why did gross margin dip to 51.1% in Q3?
Gross margin excluding one-offs slipped 0.3 percentage points from last quarter despite record sales, leaving a 1.4-point jump needed in the fourth quarter to hit the 52.5% to 53.0% year-end hope. Management needs to explain whether component costs or tool mix held it back.
Is the AI software line contributing second-half revenue?
In the first quarter, management said its new artificial intelligence software products would begin generating revenue in the second half of 2026, and it bought Visual Layer in the second quarter. It has not updated that revenue contribution since.