Nova (NVMI) Q3 2025: Memory Revenue Climbs to 30% of Sales, Powering Record Growth
Nova’s Q3 highlighted a decisive shift as memory revenue surged to 30% of sales, balancing advanced logic and packaging momentum. Operational leverage and new product adoption drove margin resilience despite product mix shifts. Management’s outlook signals continued outperformance versus wafer fab equipment growth, with advanced packaging and AI exposure underpinning 2026 confidence.
Summary
- Memory Mix Shift: Memory climbed to 30% of revenue, signaling end-market diversification beyond logic dominance.
- Advanced Packaging Acceleration: New platform launches and customer wins position Nova for higher-value applications.
- 2026 Outperformance Signal: Management expects to outgrow wafer fab equipment spending, driven by AI and advanced node demand.
Performance Analysis
Nova delivered record quarterly revenue, up 25% year-over-year, as both memory and advanced logic segments contributed to growth. The memory business, led by DRAM and high bandwidth memory (HBM), accounted for 30% of product revenue, a marked increase from historical levels and a signal of Nova’s expanding customer base and end-market reach. Advanced logic, especially gate-all-around (GAA) process adoption, remained the largest revenue source, with Nova’s Ellipson and Metrium platforms gaining further traction at leading customers.
Gross margins held at 59% on a non-GAAP basis, within the target range despite increased investment in R&D and a product mix shift toward memory and advanced packaging. Operating margin expanded to 32% non-GAAP, demonstrating the model’s scalability as Nova leverages top-line growth to fund innovation. Free cash flow generation remained robust, supporting a $1.6 billion cash position post-convertible note issuance, which strengthens the company’s ability to pursue M&A and strategic investments.
- Segment Mix Evolution: Memory’s share rose to 30%, with logic and foundry at 70%, reflecting shifting end-market dynamics.
- Advanced Packaging Contribution: Revenue from advanced packaging is expected to reach 20% of 2025 sales, up from 15% last year.
- Geographic Normalization: China revenue is stabilizing at a lower share, with nominal growth but less overall exposure.
Nova’s performance underscores its ability to capture secular trends in AI, advanced memory, and packaging, while maintaining operational discipline and strategic flexibility.
Executive Commentary
"This quarter reflects the strength of NOVA's strategy and execution across all fronts, from technology leadership to operational scale. As our industry continues to evolve, driven by AI and increasingly complex architectures, Nova is well positioned to support our customers with differentiated, scalable, and innovative solutions."
Gabby Weissman, President and CEO
"Operating margin in the third quarter reached 32% on a non-GAAP basis, demonstrating the scalability of our model and the strong value proposition of our process control portfolio. This strong financial position enabled us to continue investing in R&D and strategic growth initiatives while maintaining the flexibility to pursue M&A opportunities and capitalize on market trends."
Guy Kisner, CFO
Strategic Positioning
1. Memory as a Growth Engine
Nova’s memory revenue surged, driven by demand for advanced DRAM and HBM. The company’s materials metrology platforms, such as VeriFlex and Prism, secured new orders and replaced competing tools, expanding Nova’s footprint at leading memory fabs. Management expects memory to be a key growth driver in 2026, with a long-term mix target of 40% memory and 60% logic, reflecting higher metrology intensity in logic but faster near-term memory growth.
2. Advanced Logic and GAA Leadership
Gate-all-around (GAA) process adoption fueled record logic sales, with Nova’s Ellipson platform selected as a tool of record by a top global player. The company is exposed to all four major GAA customers and expects cumulative business from GAA to reach $500 million from 2024 to 2026, on track with initial plans. This positions Nova at the center of next-generation logic manufacturing.
3. Advanced Packaging Expansion
Nova is scaling in advanced packaging, launching the WMC platform and securing wins across HBM and power device manufacturing. Advanced packaging revenue is set to reach 20% of 2025 sales, with strong demand for dimensional and chemical metrology solutions. The new Mannheim facility triples production capacity for packaging metrology, supporting future growth and operational excellence.
4. Capital Strength and M&A Readiness
The $750 million convertible note issuance boosts Nova’s war chest for inorganic growth. Management is focused on process control and adjacent semiconductor segments, with a dedicated team pursuing tuck-in and strategic deals to accelerate market share gains and technology leadership.
5. Geographic and End-Market Diversification
China revenue is stabilizing at a lower share, with normalization expected into 2026. This reduces concentration risk and aligns with global market dynamics, while Nova’s exposure to AI, logic, and packaging customers in other regions provides resilience and upside.
Key Considerations
Nova’s Q3 demonstrated the benefits of a balanced portfolio, with memory, logic, and packaging all contributing to growth and margin stability. Investors should weigh the following:
- AI-Driven Demand: Large-scale AI investments are driving complex process control needs, supporting Nova’s differentiated solutions.
- Product Mix Volatility: Shifts between memory and logic can impact margins and revenue visibility, requiring ongoing operational discipline.
- Advanced Packaging Ramp: New platform launches and customer evaluations signal future revenue streams, but execution and adoption rates will be key.
- M&A Optionality: A strengthened balance sheet and dedicated M&A team provide flexibility to accelerate growth via acquisition.
- China Exposure Management: Normalized revenue from China reduces risk, but visibility remains limited in a dynamic regulatory environment.
Risks
Nova faces risks from cyclical wafer fab equipment spending, product mix shifts that may pressure margins, and uncertainty in China’s regulatory and demand environment. Execution risk around new platform adoption and integration of future M&A also warrants monitoring, as does the pace of AI and advanced packaging investment across the industry.
Forward Outlook
For Q4 2025, Nova guided to:
- Revenue of $215 million to $225 million
- Non-GAAP EPS of $2.02 to $2.20
For full-year 2025, management expects:
- Record revenue, up approximately 30% year-over-year
- Non-GAAP gross margin around 59%, operating margin near 33%
Management highlighted:
- 2026 growth will be second-half weighted, with AI, memory, and advanced packaging as primary drivers
- Ability to outperform overall wafer fab equipment market growth, supported by new product wins and customer momentum
Takeaways
Nova’s Q3 marks a strategic turning point, with memory, advanced logic, and packaging all contributing to record results and future confidence.
- Business Model Resilience: Diversification across memory, logic, and packaging is reducing risk and expanding opportunity, with operational leverage supporting margins.
- Strategic Capital Deployment: The strengthened balance sheet and M&A focus position Nova to accelerate growth and defend share in a rapidly evolving industry.
- 2026 Growth Watch: Investors should monitor the ramp of AI-related demand, advanced packaging adoption, and the pace of memory market recovery for upside signals.
Conclusion
Nova’s record Q3 and confident 2026 outlook reflect a company benefiting from secular AI and memory trends, advanced packaging expansion, and disciplined execution. With a robust balance sheet and diversified growth engines, Nova is positioned to outpace industry spending and capture incremental share in key technology transitions.
Industry Read-Through
Nova’s results reinforce the semiconductor equipment industry’s pivot toward AI and advanced packaging, with process control intensity rising as architectures become more complex. Memory’s resurgence and packaging innovation are likely to benefit peers with exposure to these trends, while normalized China demand and product mix volatility highlight the importance of geographic and portfolio diversification. Capital strength and M&A readiness may set a new bar for industry consolidation as secular growth continues into 2026.