Surge Components Posts Strong Growth, Eyes AI and Europe Markets

DEER PARK, N.Y. – February 27, 2026 – Surge Components, Inc. (OTC Pink: SPRS), a key supplier of electronic components, today announced robust financial results for its fiscal year ending November 30, 2025, showcasing significant growth that outpaced the broader market and detailing a multi-pronged strategy for future expansion into high-growth sectors like artificial intelligence and the European market.

The company reported a 16.4% increase in net sales, reaching $36.3 million, alongside a notable rise in profitability. The strong performance underscores the success of its strategic initiatives, including strengthening its distribution channels and proactively diversifying its supply chain amid global geopolitical shifts.

A Year of Impressive Financial Growth

Surge Components delivered a strong financial performance in fiscal 2025, demonstrating substantial growth across key metrics. Net sales climbed to $36.3 million, a significant 16.4% increase from the $31.2 million recorded in the prior fiscal year. This growth rate is notably higher than the projected 7-10% compound annual growth rate for the overall electronic components industry, indicating that Surge is successfully capturing a larger market share.

This top-line growth translated directly to the bottom line. Gross profit increased by 17.4% to $10.5 million, with the gross profit margin ticking up slightly to 28.8% from 28.5% in fiscal 2024. Net income available to common shareholders saw a significant boost, rising to $1.13 million, or $0.20 per share, compared to $820,677, or $0.15 per share, in the previous year.

“We are very pleased with our strong performance in fiscal 2025, highlighted by meaningful growth in sales, expanding margins, and a significant increase in profitability year over year,” said Ira Levy, President and Chief Executive Officer of Surge, in a statement. Levy noted that the results reflect both strong market demand and the successful execution of the company's strategy.

Notably, the company’s profitability was impacted by a one-time, non-cash charge of $538,361 related to stock-based compensation for employees. According to Levy, absent this charge, the company’s profitability would have more than doubled compared to fiscal 2024, highlighting even stronger underlying operational performance.

Strategic Channels and Global Expansion

A cornerstone of Surge's success has been its focus on expanding and strengthening its sales channels. The company attributes its sales increase in part to enhanced business through its distribution partners, which include industry giants like Avnet Inc. and Future Electronics. By deepening these relationships, Surge effectively gains access to a much broader base of end customers, a strategy proving critical in the fragmented electronics market.

In addition to its distribution network, Surge is leveraging relationships with electronic manufacturing service (EMS) subcontractors. While these relationships involve providing rebates that can slightly impact gross margins, they serve as a crucial gateway to securing business with large, high-volume customers who outsource their manufacturing. This long-term strategy allows Surge to become an approved supplier for major players it might otherwise struggle to reach.

The company is also looking beyond North America for growth, with a concerted push into the European market. The Surge division’s existing European sales operation is reportedly performing well, and the company is optimistic about its prospects for fiscal 2026. This is being complemented by a new initiative to establish a sales presence in Europe for its Challenge Electronics division, which specializes in audible components. This expansion is well-timed, as the European electronic components market is projected to grow substantially, potentially surpassing $249 billion by 2034, driven by demand in the automotive, industrial, and consumer electronics sectors.

Positioning for the Future: AI and Supply Chain Resilience

Beyond its current operational successes, Surge is strategically positioning itself to capitalize on future technology trends and navigate a complex global landscape. The company has initiated efforts to explore opportunities within the burgeoning artificial intelligence (AI) ecosystem. While Surge does not produce high-profile AI chips, it supplies the fundamental components—such as capacitors and discrete semiconductors—that are essential for the power management and signal integrity of any advanced electronic system, including AI hardware. With the AI chip market projected to grow at a staggering CAGR of over 30% in the coming decade, Surge is positioning itself as a critical “picks and shovels” supplier for the AI gold rush.

Simultaneously, Surge is addressing the significant geopolitical risks that have rattled global supply chains. In response to industry-wide demand for manufacturing capabilities outside of China, several of Surge's manufacturing partners have established secondary facilities in other countries. This “China plus many” strategy enhances the company’s supply chain resilience, mitigating risks associated with trade tensions, tariffs, and other potential disruptions.

This proactive diversification is a direct response to real-world costs; the company noted it was able to pass on $941,564 in tariff costs to its customers in fiscal 2025, demonstrating both the reality of these geopolitical pressures and the company's ability to manage them. By ensuring a more diversified manufacturing footprint, Surge can offer its customers a more stable and reliable supply of components, a significant competitive advantage in today's volatile environment.

With a strong balance sheet, a growing backlog of orders, and a clear strategy focused on penetrating high-growth markets and building a resilient operational foundation, Surge Components appears well-equipped for sustained growth in the dynamic electronics industry.