Allegro reports $277M in Q2 sales as AI data centers and cars lift chip demand

Allegro MicroSystems just turned in the kind of quarter chipmakers like to frame and hang in the lobby. The company reported fiscal second-quarter 2027 net sales of $276.9 million, up 29% from $214.3 million a year earlier.

The growth came from two places that rarely share a sentence: AI data centers and automotive safety systems.

The numbers behind the quarter

Allegro, which trades on the Nasdaq under the ticker ALGM, makes magnetic sensors and power integrated circuits. Think of these as the components that keep tabs on electricity and manage how it flows inside larger systems.

The standout figure was data center revenue, which hit a record $46 million. That represents a gain of roughly 150% year over year.

The company tied that jump to rising power densities in artificial intelligence infrastructure. Put simply, AI servers are drawing more power in tighter spaces, and every extra watt needs managing.

Automotive remained the company’s largest business. Revenue there came in at approximately $172.5 million to $173 million, an 11% increase from the prior year.

Electrification and advanced driver-assistance systems, known as ADAS, supported the automotive gains. ADAS covers features like lane-keeping and automatic emergency braking, which lean heavily on sensors.

The industrial and other segment was the quiet overachiever. It reached a record $104.4 million, up 79% year over year.

Profitability followed revenue upward. Non-GAAP diluted earnings per share landed at $0.26, double the year-ago figure, while GAAP EPS came in at $0.12, roughly four times last year’s level.

Momentum that goes beyond one quarter

This marked the company’s seventh consecutive quarter of sequential sales growth. Bookings have now climbed for eight straight quarters.

Design wins rose nearly 40% year over year, reaching their highest quarterly level since the company’s IPO. In the semiconductor world, a design win means a customer has chosen your chip for a future product.

CEO Mike Doogue highlighted broad-based growth across both automotive and industrial markets. He credited data center demand as a key fuel for that expansion.

The Motley Fool’s coverage of the results framed the story around market share. Its takeaway: gains in AI data centers and automotive safety are increasing the amount of chip content per unit, which is helping sales grow faster.

What comes next

For the third quarter of fiscal 2027, Allegro guided to net sales between $278 million and $288 million. At the midpoint, that implies year-over-year growth of approximately 23%.

Management attributed the outlook to strong demand in AI-related power management and automotive safety.

Why this matters for the broader chip story

Every AI rack needs power delivered efficiently and monitored carefully. As power densities climb, companies supplying those less glamorous components are seeing demand pull through.

Data center revenue of $46 million is still a fraction of the automotive business, but it is growing far faster.

The automotive side offers its own form of steadiness. An 11% gain is modest next to data center growth, yet it reflects structural trends like vehicle electrification and safety features that are becoming standard rather than optional.

The 79% surge in industrial and other revenue adds another dimension. It suggests growth is not concentrated in one product line.

The record design wins and eight quarters of rising bookings are arguably the most forward-looking signals in the report. They indicate customers are committing to Allegro parts in products that have not shipped yet.

Key things to watch in the coming quarters include whether data center revenue keeps compounding at a steep rate, and whether automotive growth holds as electrification trends evolve. Investors will also want to see if the company lands within its $278 million to $288 million guidance range.

Margins deserve attention too. Doubling non-GAAP EPS on 29% revenue growth shows operating leverage at work.