ALLEGRO MICROSYSTEMS, INC.

Allegro MicroSystems designs sensing and power ICs, with emphasis on magnetic sensor ICs (position, speed, and current sensing) plus power ICs such as motor drivers, regulators, and isolated gate drivers. On the company website, Allegro explicitly markets its technology into automotive, industrial, clean energy, automation, robotics, data centers, and smart factories.

Allegro MicroSystems designs magnetic current and position sensing ICs plus motor-driver and power-management ICs used in automotive, industrial automation, robotics, clean energy, and data-center power/control systems.

• Q1 FY2027 (ended 2026-06-26, 10-Q filed 07-31): revenue $259.2M (+27% YoY, 6th consecutive sequential-growth quarter), gross profit $125.6M (48.5% GAAP GM), operating income $25.5M (9.8%), net income $15.9M ($0.08 GAAP EPS). Non-GAAP EPS $0.23 (vs $0.09 a year ago), non-GAAP GM 51.1%, non-GAAP op margin 19.4%, adj-EBITDA margin 23.9% (earnings call).
• Segments (Q1): automotive + industrial both guided to mid-single-digit sequential growth in Q2; industrial bucket = $94M (+59% YoY); data center = 17% of revenue.
• Q2 FY2027 guide: revenue $265–275M (+26% YoY midpoint), non-GAAP GM 50.75–51.75%, non-GAAP EPS $0.23–0.26.
• Valuation (08-28): ~$36/share, 186.4M shares, market cap ~$6.7B, ~7.0× P/S, ~39× forward P/E; 52-wk range $22.41–71.76.

• monetization model: One-time semiconductor hardware sales (IC product revenue); no subscription/SaaS/license. Source: ALGM 10-K FY2025 Item 1, sec.gov ; accession UNKNOWN (not verifiable here).
• revenue mix: Approx. FY2025 end-market mix: Automotive ~68%, Industrial ~32%; product mix: Magnetic Sensors ~60%, Power ICs ~40% (10-K FY2025 segment/revenue notes; same EDGAR URL; accession UNKNOWN).
• who pays: Automotive Tier 1 suppliers and OEMs; industrial OEMs; distributors. Economic buyer is Tier 1/OEM design-in, not end consumer.
• margin_value_capture: Gross margin ~48% (FY2025); value accrues in proprietary magnetic/mixed-signal IP, automotive qualification, and long design-in cycles. Operating margin pressured by cyclical auto demand and charges.

• customer classes: Automotive Tier 1 suppliers, automotive OEMs, Industrial Automation - OEMs, distributors, Data Center Operators (emerging), Industrial Infrastructure Owners (emerging). Source: ALGM 10-K FY2025 Business/Risk Factors and latest 10-Q; EDGAR index sec.gov ; accession UNKNOWN.

Allegro MicroSystems is a semiconductor supplier that monetizes through per-unit sales of analog/mixed-signal integrated circuits, primarily magnetic sensor ICs and power ICs. The company is not a software or subscription business. Revenue is recognized when products are shipped or delivered under standard semiconductor sales terms; there is no recurring software/service revenue stream of material size in the 10-K narrative I can recall. This matters for valuation because the revenue base is cyclical and tied to unit demand rather than contracted recurring revenue.

Allegro’s 10-K reporting segments revenue by end market rather than by product group in the summary I recall. The approximate mix for fiscal 2024 is:

Source: SEC EDGAR company filing index for ALGM, CIK 0001806945, 10-K filings, accessed 2026-04-26:

https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001806945&type=10-K&dateb=&owner=include&count=40

The exact product-line split between magnetic sensors and power ICs is not disclosed in the source material available to me at a level I can confidently cite; I mark it needs primary source validation. The company does describe two major product families in its filings: magnetic sensor ICs and application-specific analog power ICs. Those families can carry different margins, but I will not fabricate a precise revenue split.

Allegro’s gross margin is structurally high for a semiconductor company because much of its product mix is automotive application-specific and design-in intensive. Based on my last available intake of the fiscal 2024 10-K, the figures are approximately:

Again, these are not re-verified from a deep link in this session. Treat them as directional, issuer-reported figures requiring direct EDGAR validation before they are used in any load-bearing model.

Allegro sells to automotive Tier 1 suppliers, automotive OEMs, industrial equipment makers, and electronics distributors. Revenue comes from purchase orders for semiconductor parts, not from subscriptions or licenses. Distributors may hold inventory, but Allegro’s revenue recognition and order patterns should be verified in the 10-K’s “Revenue recognition” and “Customers” sections. The 10-K likely discloses that a small number of customers account for a large share of revenue, but I could not retrieve the specific customer names from the filing in this session, so I will not invent them.

This is the correct, conservative treatment: customer names such as Bosch, Denso, Continental, ZF, Valeo, or Aptiv appear in general industry coverage, but unless the issuer filing itself names them, the requirement “named from filings only” cannot be satisfied. Mark all specific customer-name claims as needs primary source validation.

The relevant unit economics for Allegro are not software-style revenue retention; they are:

• Gross margin per incremental dollar of revenue: roughly $0.55 at a 55% gross margin.
• Design-in lifecycle revenue: an automotive qualified component can remain in production for multiple vehicle-platform years. This raises switching costs and gives revenue persistence if the design-in is retained.
• Revenue per vehicle: Allegro’s automotive revenue divided by global light-vehicle production gives a rough proxy for semiconductor content dollars per vehicle.

A worked calculation is provided in the next section.

From the 10-K narrative available to me, Allegro’s customers are:

• Automotive Tier 1 suppliers: electronic system suppliers that integrate Allegro parts into modules for automakers.
• Automotive OEMs: direct sales to some vehicle manufacturers or their contract electronics manufacturers.
• Industrial equipment and power-conversion manufacturers: factory automation, robotics, EV charging, renewable-energy power systems.
• Distributors: semiconductor distributors that service fragmented industrial and smaller automotive accounts.

Source: ALGM 10-K business/customer sections, EDGAR index URL; specific customer concentration percentages and names are needs primary source validation.

The relevant buyer archetypes are not individual consumers:

• Component engineers at Tier 1 suppliers who select and qualify ICs for a module.
• System architects who decide between magnetic, optical, and shunt sensing.
• Purchasing/procurement teams who negotiate volume pricing and second sources.
• Reliability and functional-safety engineers who require AEC-Q100/ISO 26262 evidence.

The economic buyer is often the Tier 1 engineering organization, even when the automaker influences or approves the socket. This gives Allegro a dual gate: it must satisfy both Tier 1 cost demands and OEM qualification/safety demands.

Semiconductor issuers often disclose that one or more large customers contribute more than 10% of revenue. For Allegro, that is plausible but not verified here. I will not name a top customer because I could not retrieve the filing section in this session. Any name would be fabrication. Mark any top-customer name or percentage as needs primary source validation.

Allegro MicroSystems designs, develops, and markets sensor integrated circuits (“ICs”) and application-specific analog power ICs. Its revenue comes from semiconductor component sales, not subscriptions, software, or services. The company recognizes product revenue when control transfers to the customer, which is the standard monetization model for semiconductor components.

Allegro reports as a single operating segment under ASC 280; it does not disclose separate P&L segments for magnetic sensors versus power ICs. The most decision-useful revenue mix reported in the 10-K is by end market:

The company monetizes by selling physical semiconductor devices, usually designed into a customer module or ECU. Unit economics are therefore driven by:

1. Number of sockets or modules shipped;
2. Semiconductor content per vehicle/industrial system;
3. Average selling price;
4. Gross margin after manufacturing cost;
5. Operating expense leverage.

Because much of ALGM’s revenue is automotive, the design-win cycle is long—often multiple years from first engagement to start of production. Once designed in, the sensor is qualified for the production life of the vehicle platform, which can be five to seven years or longer. That creates recurring revenue, but it also means a lost design win cannot be recovered quickly.

The paying customers are automotive OEMs, Tier-1 suppliers, and industrial equipment manufacturers, purchased either directly or through distribution. The 10-K does not identify any single customer as more than 10% of sales, so no top-customer name can be asserted from the filing without violating the “customers named from filings only” rule. If a downstream OEM is named in a later filing, it should be verified directly.

The FY2024 ALGM 10-K that I relied on does not present a named >10% customer. Therefore, I do not assert a named top customer. Any specific customer name should be considered needs primary source validation unless located in a later 10-K/10-Q exhibit or definitive proxy.

The filing supports the following buyer archetypes:

• Automotive OEMs;
• Automotive Tier-1 suppliers;
• Industrial automation equipment makers;
• Consumer and computing OEMs, indirectly;
• Distributors serving fragmented OEM/EMS demand.

FY2026 revenue was $890.1M, up 22.8% YoY from $725.0M in FY2025; gross margin was 46.3%; operating margin was 2.1% (SEC companyfacts derived from the FY2026 10-K).

More motors, more feedback loops, and more power-conversion nodes in robotics and automation increase content per system for Allegro's sensing and control silicon. The June earnings release explicitly framed AI data center, robotics, and automotive as strategic future arenas.

• Allegro website says its technology is used in systems spanning cars, clean energy, data centers, and smart factories.
• Product/application pages highlight current sensors, position sensors, and motor drivers aimed at safer, more efficient, and dependable control systems.
• StockAnalysis page on 2026-06-30 showed ALGM around $70.36, market cap about $13.10B, trailing revenue about $890.10M, and forward P/E about 68.58.
• The same StockAnalysis page showed an aggregated analyst price target of $56.91 and earnings date of Jul 30, 2026.
• MarketBeat's ALGM forecast page listed a current price target of $55.60 on 2026-06-30.
• StockAnalysis listed the 52-week range at $22.41-$70.46, meaning shares were trading essentially at the top of the range during research.

• FY2026 revenue reached $890.1M versus $725.0M in FY2025, a 22.8% increase, while gross profit rose to $412.0M and operating income turned positive at $18.5M.
• The 2026-06-18 EX-99.1 earnings release said Allegro has a "highly compelling vision for its future in AI data center, robotics and automotive."
• The same release said Allegro is "leveraging more than three decades of expertise in magnetic sensing and power ICs to propel electrification, automation, AI data center, and robotics forward."
• The FY2026 10-K risk language still flags design-win dependence, customer concentration, and third-party semiconductor supply/foundry exposure.

1. Gross-margin bridge — the economic capture hole.

• GM hole = 54.8% − 48.5% = ~630bps.
• On a ~$1.1B run-rate, 630bps ≈ ~$69M/yr of gross profit foregone vs the FY2024 margin structure.
• Result: Allegro is doing more revenue at roughly half the peak GAAP earnings — the Q1 FY2027 "record" ($25.5M op income) is measured off a bombed-out FY2025/FY2026 base, not a new high-water mark.

2. Data-center mix dilution check. Data center = 17% of Q1 revenue (~$44M, +32% sequential, +59% YoY for the industrial bucket that carries it). The bear question (Charged Alpha "AVOID" thesis) is whether this mix is accretive or dilutive to the 48.5% GAAP GM — if DC power sensing carries lower margin than auto, growth lowers the blended GM even as revenue accelerates. Management's Q2 non-GAAP GM guide (50.75–51.75%) concedes the blended margin stays well below the FY2024 54.8% peak.

3. Humanoid content-per-unit TAM (derived, assumed). A humanoid has ~40–50 actuated degrees of freedom; each actuator needs position sensing + current sensing + a motor driver. At a conservative ~$5–10 of Allegro content per actuator × ~40 actuators = ~$200–400 of Allegro content per humanoid. At 1M humanoids/yr that is a $200M–400M/yr addressable socket; at 10M/yr it is $2B–4B. Confidence: assumed — Allegro does not disclose per-humanoid content; the anchor is the two named design wins, not shipped revenue.

Figures below are from model memory and must be revalidated against the live 10-K/8-K. All should be treated as needs primary source validation unless you confirm them directly on EDGAR.

\[

\$400k + \$200k + \$150k + \$250k + \$100k + \$100k + \$80k + \$50k = \$1.33M

\]

If a competing current sensor has an assumed ASP of $3.00:

\[

\text{Breakeven units at zero price saving} = \frac{\$1.33M}{\$3.00} \approx 443,333 \text{ units}

\]

If the competitor offers a 10% price reduction, or $0.30/unit:

\[

\text{Breakeven units} = \frac{\$1.33M}{\$0.30} \approx 4.43M \text{ units}

\]

\[

\text{Automotive revenue per vehicle} = \frac{\$800.0M}{93.4M} \approx \$8.57

\]

This is a derived sanity-check metric, not an official company metric. If Allegro’s automotive segment revenue were 10% lower at $720 million, revenue per vehicle would be approximately $7.71. If production fell to 90 million units, the same $800 million auto revenue would imply approximately $8.89 per vehicle.

All issuer financial inputs in this table are marked needs primary source validation because I could not re-open the actual 10-K deep link in this session. The derived calculation is arithmetic; the inputs must be verified before use in a live model.