OLED Q2 Deep Dive: Demand Trends and Technology Advances Shape Outlook

OLED provider Universal Display (NASDAQ:OLED) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 8.4% year on year to $171.8 million. The company’s full-year revenue guidance of $675 million at the midpoint came in 0.7% above analysts’ estimates. Its non-GAAP profit of $1.41 per share was 20.5% above analysts’ consensus estimates.

Is now the time to buy OLED? Find out in our full research report (it’s free).

StockStory’s Take

Universal Display’s second quarter reflected stronger-than-expected demand, with management attributing growth to increased adoption of OLED technology across consumer electronics, automotive, and IT markets. CEO Steven Abramson highlighted that expanding product portfolios and rising use in tablets, laptops, and monitors were key contributors. Management also noted that recent industry events, such as Display Week, showcased how OLED innovation is driving new form factors, including foldable and rollable devices, further enhancing the company’s addressable market.

Looking ahead, management’s guidance is shaped by expectations for continued OLED adoption in emerging device categories, supported by upcoming capacity expansions from major panel makers. CEO Steven Abramson pointed to the anticipated ramp-up of Gen 8.6 OLED fabrication plants and the company’s advancements in phosphorescent blue materials as significant drivers. While macroeconomic uncertainty persists, management believes new applications in automotive displays and IT devices will support a multi-year growth trajectory, stating, “The OLED industry is entering a dynamic new phase of expansion.”

Key Insights from Management’s Remarks

Management credited the quarter’s performance to robust OLED demand in IT and automotive, as well as innovation in product design and materials.

• IT and Automotive Market Growth: Management emphasized the expanding role of OLEDs in tablets, laptops, monitors, and automotive displays, highlighting that less than 5% of IT displays currently use OLED. The anticipated doubling of OLED IT units by 2027, along with over 300% growth in automotive OLED display shipments by 2029, reflects significant near-term opportunities.
• New Form Factors Driving Content: The rise of foldable and rollable devices is increasing material content per unit. CFO Brian Millard noted that foldable phones can use up to two to three times more OLED materials than traditional smartphones, creating incremental revenue potential as more OEMs launch such products.
• Contract Research Revenue Surge: The Adesis contract research business, unrelated to the core OLED segment, posted strong revenue growth this quarter due to new customer contracts in the life sciences sector. Management expects further growth from this segment, which diversifies overall revenue streams.
• Advancements in Blue OLED Materials: The company achieved a milestone in blue phosphorescent OLED development, with $1.1 million in blue revenue for the quarter. Management believes commercial introduction of blue materials will improve display energy efficiency by up to 25%, further supporting demand across device categories.
• AI/ML-Driven R&D Acceleration: Universal Display’s proprietary artificial intelligence and machine learning platform is accelerating materials discovery and optimization. CEO Steven Abramson explained that a robust OLED data set allows faster development of next-generation reds, greens, yellows, blues, and host materials, enhancing competitiveness and customer value.

Drivers of Future Performance

Universal Display expects future growth to be driven by expanding OLED adoption in IT and automotive, new capacity investments, and ongoing technology innovation.

• Capacity Expansion by Panel Makers: The upcoming launch of Gen 8.6 OLED fabrication plants by Samsung Display, BOE, and Visionox is expected to boost industry capacity, addressing rising demand for medium-sized OLED panels in IT and automotive. Management anticipates a multiyear capital expenditure cycle to meet this growth.
• Product Innovation and Efficiency Gains: Ongoing R&D in phosphorescent blue is positioned to improve display energy efficiency, with management citing up to 25% gains. These innovations may support broader adoption in battery-sensitive devices and premium segments, including tandem architecture displays for IT and automotive.
• Customer Ordering Patterns and Macro Risks: Management acknowledged potential headwinds from variable customer order timing, tariff-related buying patterns, and broader macroeconomic uncertainty. CFO Brian Millard stated that while guidance reflects current customer feedback, the company remains cautious about forecasting due to limited visibility into channel inventory and regional seasonality.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will monitor (1) the commercial rollout of blue phosphorescent OLED materials and their adoption in next-generation devices, (2) progress on Gen 8.6 OLED fabrication plants and their impact on IT and automotive market penetration, and (3) evolving customer order patterns, especially in China and other key regions. The pace of innovation in display form factors and improvements in R&D productivity will also be important signposts.

Universal Display currently trades at $140.41, down from $144.72 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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