Nova Ltd. Raises WFE Growth Outlook, Eyes $1 Billion Revenue Target on Record Q1 and Accelerating Hybrid Bonding Demand
Q1 2026 Earnings Call, May 14, 2026 — Nova delivers its strongest quarter on record across revenue, margins, and services, while signaling faster-than-expected hybrid bonding adoption and an upward revision to its WFE growth estimate
Record Quarter Across the Board, Guidance Steps Higher Again
Nova Ltd. opened 2026 with a clean sweep of records. First quarter revenue reached $235.3 million, up 6% sequentially and 10% year-over-year, beating the top end of its own guidance range. Non-GAAP earnings per diluted share came in at $2.33, again above the high end of guidance. The company is guiding Q2 revenue to $245 million to $255 million, implying roughly 6% sequential growth at the midpoint, with non-GAAP EPS of $2.34 to $2.48. Services revenue grew for the 13th consecutive sequential quarter, a streak that speaks to the compounding value of an expanding installed base rather than a one-time dynamic.
Gross margins remained near the top of Nova's 57% to 60% non-GAAP target range at 59.4% in Q1, supported by a favorable product mix and the continued contribution from higher-margin services. CFO Guy Kizner was direct about the outlook: "I would say this will be sustainable during the year." Non-GAAP operating margins hit 34%, comfortably above the top of the company's 28% to 33% target model, driven by operating leverage even as R&D and go-to-market investment continues. The Q2 guide does reflect higher operating expenses — GAAP OpEx is expected to step up to approximately $72 million from $64.9 million in Q1 — though management framed this as deliberate investment rather than cost creep.
WFE Outlook Revised Upward; Nova Expects to Outgrow the Market
One of the more notable disclosures was an upward revision to Nova's wafer fabrication equipment growth expectations. CEO Gabriel Waisman stated that the company now expects WFE to reach mid-teens growth in 2026, up from the framework being used at the February earnings call. "We are expecting to outperform this number," he said, with growth expected across Logic, Memory, and advanced packaging. The company's $1 billion revenue target by 2027 remains intact and, based on the Q1 and Q2 trajectory, looks increasingly credible.
When pressed by a Morgan Stanley analyst on the apparent tension between mid-teens WFE growth and the higher figures — well into the 20s — being cited by process tool companies, Waisman acknowledged the uncertainty but noted a structural advantage: Nova participates in both process and process control spending. "Nova capitalizes on growth vectors of both process and process control," he explained, pointing to its integrated metrology embedded directly in process tools, its standalone dimensional metrology, and its growing lab-to-fab adoption as three distinct revenue levers that give it exposure to WFE growth regardless of which sub-segment leads.
Memory at Two-Thirds of Memory Revenue Is Advanced DRAM; HBM Bookings Building
Memory represented 34% of total Q1 revenue and hit a record, with advanced DRAM accounting for approximately two-thirds of the memory segment. The Metrion in-line SIMS platform continued its transition from initial adoption into broader deployment, with repeat purchases from a leading memory customer for both 3D NAND and DRAM. Nova's AncoScene front-end chemical metrology solution also posted a record quarter, with new market share captured at a leading memory customer in Asia with multiple tool deliveries expected throughout the year.
Looking ahead, Waisman signaled that HBM is becoming a more meaningful line item, with "robust HBM-related bookings" for the Nova WMC and Semdex standalone platforms. He also confirmed that some pull-ins from memory customers specifically around hybrid bonding are already materializing, a development discussed further below. For the full year, Waisman expects memory to become a larger share of overall revenue relative to 2025, consistent with the industry-wide surge in advanced DRAM investment.
Hybrid Bonding Adoption Accelerating Faster Than Expected — and It Is Highly Metrology-Intensive
Perhaps the most strategically significant disclosure on the call was Waisman's characterization of hybrid bonding adoption as progressing "faster than expected in several advanced device segments." This is meaningful for Nova because hybrid bonding is structurally more demanding on metrology than conventional packaging. "Because the process depends on direct copper-to-copper interfaces and ultrafine pitch interconnects, it is highly metrology-intensive, requiring tight control of surface planarity, alignment accuracy and interface integrity throughout multiple process steps," Waisman explained.
The specific metrology challenges he enumerated — CMP uniformity within wafer and within die, work pitch, edge roll-off, interconnect yield — each represent incremental tool opportunities. Nova already has positioning with top-tier customers in hybrid bonding and is seeing pull-ins, particularly from memory customers. For a company that has built its advanced packaging business to approximately mid-20s as a percentage of product revenue, hybrid bonding represents an additional layer of metrology intensity on top of an already-growing base. The pace of adoption being ahead of schedule is a positive surprise with direct revenue implications.
Advanced Packaging Now Mid-20s of Product Revenue; China Packaging Demand Rising
Advanced packaging as a whole edged toward the mid-20s of product revenue in Q1, with the majority still coming from Logic customers. Waisman indicated the company sees growth in advanced packaging for the full year in line with what peers have been reporting. Notably, he also called out growing demand from Chinese customers in this segment, citing a "multitude of new customer engagements around advanced packaging and high-bandwidth memory" in China — a constructive data point in a geography that otherwise faces structural headwinds from Nova's perspective.
China overall remains a watch item. Waisman confirmed the company expects China's share of revenue to decrease as advanced node spending outside China expands, consistent with trends seen in 2025 versus 2024. The long-term stabilization target of 25% to 30% of revenue from China remains the framework. Near-term, he characterized momentum as "some positive" improvement relative to Q4 2025, stopping well short of calling it a reacceleration.
Gate-All-Around Momentum and Intel Recognition Underscore Logic Positioning
In Logic, Nova posted record integrated metrology revenue, driven by gate-all-around ramps and new customer penetrations in both mature nodes and advanced packaging. The company confirmed it remains on track for its $500 million cumulative gate-all-around revenue target and expects gate-all-around investment to grow further in 2027. Nova was also awarded Intel's EPIC Supplier Award for 2026, described as "the highest honor in Intel's global supply chain." While supplier awards are often ceremonial, being named to a select list out of thousands of Intel suppliers does validate the depth of the Nova-Intel relationship at a time when Intel's own capex trajectory is a closely watched variable.
X-Ray and XPS: Market Expanding, Competition Emerging
Nova's response to a question about X-ray technology opportunities was notably candid on the competitive front. The company sees significant opportunity in X-ray — both for front-end applications and in advanced packaging contexts like void detection for hybrid bonding — and has pursued a hybrid metrology strategy combining optical and X-ray tools with machine learning, citing published papers with Samsung and IBM as evidence of customer-level collaboration. However, Waisman acknowledged that XPS and material metrology competition is emerging, including from a local Chinese vendor and "other potential growing competition in years to come." He framed this as a reason to continue investing in the roadmap rather than a near-term revenue risk, but it is a dynamic investors should track as XPS becomes a larger market.
New Asia Facility, Supply Chain Pressures, and Cost Management
To support growth and reduce geographic concentration risk, Nova is building a new production facility in Asia expected to be operational by end of 2026. The facility is designed to expand capacity, optimize cost structure, and position manufacturing closer to key customers. Waisman also flagged real supply chain pressure — "some cost pressure at the supplier level, mainly tied to higher chip prices and other factors" — but said the company has been able to manage through active cost management and long-term supplier relationships. Lead times remain shorter than peers, which Waisman cited as a competitive advantage, though demand strength and the 2027 planning horizon already visible in some customer orders suggest this could tighten.
Market Share: Second Largest Vendor, Second Consecutive Year of 400bps Gains
The latest Gartner market share data confirmed Nova gained approximately 400 basis points of share in film and critical dimension metrology in 2025, the second consecutive year of gains at that scale, cementing its position as the second-largest vendor in the category. Waisman characterized continued share gain as a "primary objective" and pointed to advanced packaging — including the growing Chinese advanced packaging ecosystem — and hybrid bonding as the segments with the most opportunity for further gains. The Gartner data, while lagged, provides independent validation of the competitive trajectory that Nova's own revenue growth and customer win announcements have suggested.