Call us believers in the Qnity Electronics story. We have a buy-equivalent rating of 1 and a $110 per share price target on the newly public DuPont spinoff. We’re betting that Qnity has a lot of upside potential going forward thanks to its exposure to long-term trends like artificial intelligence and high-performance computing. Qnity is a leading supplier of chemicals and materials used in semiconductor and electronic device manufacturing. As more chips and electronic devices are built, the demand for Qnity products increases. Executives made that clear again Thursday night when they hosted what was essentially a “light” earnings conference. Investors had already seen Qnity’s numbers for the July-September period, as DuPont released its third-quarter results before the opening bell on Thursday. Thursday night’s conference call provided Qnity management with further insight into its performance and an opportunity to offer its own outlook on the separated company, which began regular trading on the New York Stock Exchange and joined the S&P 500 on Monday. The stock price has posted strong daily gains since the beginning of the week, but Qnity stock also fell as broad AI trading was hit by a wave of selling. Thursday night’s biggest highlight: Qnity raised its full-year 2025 revenue outlook to $4.7 billion, an increase of $100 million from the guidance it provided at its investor day in September. This is a very good start for an independent company. Meanwhile, management supported its full-year adjusted EBITDA guidance of $1.4 billion by a margin of approximately 30%. EBITDA stands for earnings before interest, taxes, depreciation and amortization, and is a measure of operating profit. There is one thing to keep in mind. Qnity’s $1.4 billion target is based on a “pro forma” basis, meaning it has been revised to show what Qnity’s adjusted EBITDA would have been if it had been a standalone company for the entire year. This is standard practice in spin-offs and gives investors a financial starting point for valuation. The profit metrics discussed below are also on a pro forma basis. Third Quarter Results For the three months ended September, Qnity’s revenue increased 11% year-over-year and 10% organically at constant currency to $1.3 billion. Adjusted operating EBITDA was $370 million, an increase of 6% year-over-year, resulting in a profit margin of approximately 29%. Adjusted net income increased approximately 16% year over year. It should be noted that reported results and guidance were impacted by approximately $40 million in revenue expected in the third quarter as customers sought to capture orders prior to spin. Adjusting for this advance, third-quarter organic sales would have been closer to 7%, but the fourth-quarter target would have been a little stronger. “We have delivered six consecutive quarters of sustained and strong organic growth,” CEO John Kemp said Thursday night. “We continue to build momentum and invest in our fastest-growing and highest-margin areas with a strong innovation pipeline, real competitive advantages, and are making meaningful progress by creating a culture that remains focused on what really matters: customers, innovation, speed, and people, enabling us to deliver with purpose and agility at the pace our customers demand.” Digging a little deeper, Qnity reports results for two segments: Semiconductor Technology and Interconnect Solutions. The Semiconductor Technology sector is home to products used directly in the complex process of integrated circuit manufacturing (customers include major foundries TSMC and Samsung, for example) and materials used in certain television screens and other electronic displays. South Korean consumer electronics giant LG is also a Qnity customer. As for our Interconnect Solutions division, we supply materials used in the advanced packaging of chips, an increasingly important step in the manufacturing process of AI processors. It’s also home to thermal management chemicals, but it’s also benefiting from the AI boom, as the performance features of AI chips generate a lot of heat. The two segments may seem to have many similarities, but that’s because they are closely related. Seven of Qnity’s top 10 customers use solutions from both of the company’s business segments, Kemp said. In the third quarter, Semiconductor Technologies’ revenue increased approximately 8% on the back of a 9% increase in sales volume. This indicates that demand is increasing rather than relying on price increases to boost sales. CFO Matthew Harbaugh said on a conference call that the volume increase was “driven by increased content and improved customer engagement through advanced node migration.” Interconnect Solutions, meanwhile, delivered about 15% year-over-year revenue growth, Harbaugh noted, on the back of a 15% volume increase “led by the strength of its AI-driven technology enhancements.” The finance chief also said the division is benefiting from growth in industrial end markets such as aerospace, defense and automotive. Q ALL Mountain Qnity stock price performance. Comments As mentioned above, Thursday night’s conference call was an excellent opportunity to hear from Mr. Kemp and Mr. Harbaugh in establishing relationships with the investment community. Mr. Kemp previously served as President of DuPont’s Electronics and Industrial Division. Harbaugh, who joined the team in May, was an outside hire with spinoff experience. During the conference call, Kemp offered some thoughts on the trends driving business. “Semiconductor market recovery continues to be driven by the adoption of cutting-edge technologies for AI applications, including advanced logic, high-bandwidth memory, advanced packaging, and thermal solutions.” He also noted that customer utilization rates appear to have improved slightly on a quarter-over-quarter basis. Harbaugh said one of Qnity’s strengths, particularly in the interconnect solutions sector, is its exposure to the fastest growing part of the semiconductor industry. The AI chip market is much hotter than analog chips, as the recent earnings report from long-established chipmaker Texas Instruments showed. The disparity in performance between segments of the same club name, Broadcom, also illustrates this dynamic. “While the broader semiconductor market is still recovering, we are seeing accelerated growth in several parts of our interconnect sector, highlighting the strength of our portfolio diversification across the semiconductor and advanced electronics value chain,” Harbaugh said. “Looking to the future, our fundamentals remain strong.” Another reason to like Qnity’s prospects is its global footprint, given the global trade tensions we face. Kemp called Qnity’s local-to-local approach “a key strategic advantage underlying our performance.” “Our manufacturing and research and development facilities are located close to our customers, increasing our intimacy with them, strengthening our supply chain resilience and increasing our agility to ensure a consistent and stable supply,” he said. “With this footprint and local engagement model, we offer the best of both worlds, offering deep customer collaboration backed by capabilities at scale.” (Jim Cramer’s charitable trusts are Long Q, AVGO. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you’ll receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. 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