Allegro MicroSystems Investor Day: “Reimagined” Plan Targets 20% Sales Growth, 55%+ Margins

Allegro MicroSystems (NASDAQ:ALGM) used its 2026 Analyst Day to outline what CEO Mike Doogue called “Allegro Reimagined,” a strategy centered on accelerating revenue growth, expanding profitability, and targeting higher-growth automotive and industrial end markets. The event marked roughly Doogue’s first year as CEO and came as the company said it is exiting fiscal 2026 (ending in March) with what it described as strong momentum.

Fiscal 2026 momentum and updated long-term targets

Doogue said Allegro’s fiscal 2026 sales are on pace to grow by more than 20% year-over-year, and that the company expects to exit the fourth quarter with more than a 400 basis point increase in gross margin versus a year earlier. CFO Derek D’Antilio later added that at the midpoint of Q4 guidance, Allegro is projecting to exit fiscal 2026 at approximately 50% gross margin, about 440 basis points above the prior year, with operating margins projected around 16%.

Management presented a new long-term financial model built around mid-teens revenue growth and a return to gross margins above 55%, while limiting operating expense growth to roughly inflation. Doogue said delivering the model would put Allegro “on a path to double our revenue and quadruple our EPS,” and D’Antilio quantified the EPS target as more than $2, which he said would be roughly four times fiscal 2026 EPS.

Strategy centered on xEV, ADAS, data center, and robotics

Executives emphasized that Allegro’s core technologies—magnetic sensors and power ICs—are being applied to markets where the company expects content expansion and share gains. Doogue said magnetic sensors represent 61% of sales, while automotive accounts for just over 70% of revenue and industrial represents about 28%.

In automotive, the company is prioritizing xEV and ADAS. Doogue said Allegro expects its automotive business to grow at a CAGR “north of 10%,” outpacing overall vehicle production. Troy Coleman, recently appointed SVP of Products, said the company expects to outpace auto production (SAAR) by 7%–10%, driven by mix shift to xEV and increasing ADAS adoption. He outlined a path for dollar content per vehicle rising from about $40 in fiscal 2021 to $60 “today” and “upwards of $100” longer term, citing xEV, ADAS, 48-volt architectures, and new products.

In industrial, SVP Mark Gill described a nearly $6 billion opportunity growing around 17% annually, with targeted focus markets in AI data centers and robotics. He said Allegro’s data center opportunity is driven by both power delivery and cooling, with a cited $425 average content opportunity per rack, and a $1.7 billion serviceable market tied to fan motor drivers, high-bandwidth current sensors, and isolated gate drivers. Gill described humanoid robotics as a longer-dated but potentially large opportunity, citing more than $150 of content per “high-end robot” and a $1.4 billion serviceable market growing above 30%, while also noting meaningful humanoid revenue is “still years away.”

Technology and product drivers: TMR, isolated gate drivers, and 48-volt

Across presentations, executives highlighted two platforms as key share-gain engines: TMR (tunneling magnetoresistance) sensors and isolated gate drivers. Doogue said TMR provides higher accuracy, resolution, and speed than Hall-based solutions, and that fewer competitors participate in TMR, which he said supports share gains.

On product developments, Coleman pointed to Allegro’s 10 MHz TMR current sensor and said Electronic Design News named it “Product of the Year” the prior week. He also said the company recently introduced what he described as the industry’s most accurate current sensor and introduced the “most power-dense current sensor” at CES. Coleman said isolated gate drivers can perform functions in one chip that competitors need two chips to implement, and he teased a new ADAS-related integrated solution expected “later this spring.”

Management also discussed a shift to 48-volt electrical architectures as a multi-market tailwind. Coleman described efficiency and weight benefits for automakers, said Allegro’s 120-volt process technology positions it for “true 48-volt” systems, and noted demand signals beyond automotive, including data centers and robotics.

Go-to-market overhaul, China strategy, and margin levers

SVP of Global Sales Rick Madormo said Allegro reorganized its salesforce away from a geography-based structure to end-market teams (automotive and industrial), aiming for deeper application expertise and faster design-win execution. He also described a two-pronged distribution strategy combining global distributors (including Arrow and Future) and specialty distributors (including Digi-Key and Mouser).

On China, Madormo said China represents 28% of Allegro’s business and that 90% of that China revenue is safety-critical automotive or powertrain-related. He said design wins in China grew 35% year-over-year, and outlined a “China-for-China” supply chain strategy that includes qualifying local OSATs and local foundries. Doogue later said technology moved into China would be on older process nodes tied to much of the automotive revenue in the region, and that Allegro is being selective about not moving its newest technologies to new partners.

D’Antilio detailed the gross margin roadmap back above 55% as driven by operating leverage, factory efficiencies, and improving variable contribution margins through product mix (including higher-margin industrial), more feature-rich products, and cost innovation such as die shrinks and bill-of-material reductions. He said input costs have continued to rise while pricing has normalized from prior peaks, making the current environment structurally different than a period three years ago when gross margin briefly exceeded 58% on a non-GAAP basis.

During Q&A, executives also addressed the company’s data center margin profile. D’Antilio said data center gross margins are about 200 basis points below the company’s overall average today because revenue is still heavily weighted to motor drivers. He said mix shift toward current sensors and, later, isolated gate drivers should improve the margin profile, and reiterated that isolated gate driver revenue in data centers is expected to begin meaningfully contributing in roughly 18–24 months.

On capital allocation, D’Antilio said Allegro expects record free cash flow in fiscal 2026 and plans to prioritize reinvestment in growth, selective M&A, maintaining a strong balance sheet, and potentially opportunistic share repurchases. He said the company has reduced debt by $165 million over the last two years and cited a net leverage ratio below 1-to-1.

About Allegro MicroSystems (NASDAQ:ALGM)

Allegro MicroSystems, Inc (NASDAQ: ALGM) is a leading designer and manufacturer of high-performance power and sensing integrated circuits. The company focuses on semiconductor solutions that enable precise motion control, energy-efficient power management and robust sensing in a wide range of applications. Allegro’s product portfolio includes Hall-effect magnetic sensors, current and position sensing ICs, motor driver and controller devices, and power management components.

Allegro MicroSystems serves major automotive, industrial and consumer markets worldwide.