ASE Technology sees 27% revenue jump on AI, data center demand but margin growth slows

ASE Technology Holding Co., Ltd. reported a strong second quarter with 27% year-over-year revenue growth driven by surging demand in AI and data centers. The company’s advanced packaging and testing segments are expanding capacity, supporting robust revenue guidance. However, margin guidance was slightly weaker due to rapid ramp-up in electronics manufacturing services and capacity expansion. ASE’s LEAP business is performing well, expected to generate over $4 billion in revenue by 2026 with potential for further doubling. Heavy capital investments will likely continue through 2028, which may pressure free cash flow, capital returns, and margins. The stock is rated Hold given the balance of upside potential and risks related to growth and margin sensitivity.