Up 300%, This Artificial Intelligence (AI) Upstart Has Room to Soar

Key Points

• Semiconductor reliability is crucial to data centers.

• Even tiny failure rates have a massive impact.

• Meet the refreshed AI company with a gigantic opportunity.

• 10 stocks we like better than Aehr Test Systems ›

One stock that is not on the radar of most mainstream investors has quietly risen by more than 300% since April 2025, moving from an intraday low of $6.27 per share all the way to an intraday high of $26.43 per share in late August. Previously, the stock had peaked at over $50 per share in 2024. What changed? It became an artificial intelligence (AI) stock after suffering in the downturn of the electric vehicle market. Most investors probably haven't caught on yet, and, until recently, the company may not have recognized the AI opportunity it had, either.

I'm referring to Aehr Test Systems (NASDAQ: AEHR), and I'll explain why this company is crucial to the AI and data center industries. There is still a significant opportunity for investors to capitalize on, even if they missed the bottom.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Why is Aehr critical to AI?

Here is the 30,000-foot view. When companies, notably hyperscalers, build massive data centers full of tens of millions, and sometimes hundreds of millions, of semiconductors (chips), they must ensure that they are reliable. High failure rates are extremely costly in terms of remediation, labor, downtime, and replacements. If the company selling the chips has a high failure rate, its competitors can gain traction. Aehr Test Systems provides the necessary reliability testing systems.

Their importance cannot be understated. The latest chips are stackable (multiple layers of chips forming one unit), which allows for exponentially more processing power. However, there is a catch. Many times, they are a "single point of failure." In other words, if one chip in the stack fails, the entire stack fails. The importance of reliability testing has increased by an order of magnitude as a result. And now Aehr is the hot name that could become a stock market darling again.

Image source: Getty Images.

Is Aehr stock a buy now?

You have probably heard about the massive data centers that the "hyperscalers," companies like Meta Platforms, Amazon, Elon Musk's xAI, and other tech giants, are building across the country and the world. In fact, trying to keep up with all of the announcements of new projects would make your head spin. In many cases, the data center campus spans more than a square mile and contains hundreds of thousands of chips. Elon Musk's xAI project, dubbed "Colossus," is said to require over a million GPUs in the end.

As shown below, the number of hyperscale data centers is soaring with no end in sight.

Source: Statista.

This number increased to more than 1,100 at the end of 2024, nearly doubling over the past five years. The demand is primarily driven by artificial intelligence, which is why Aehr is now an "AI stock" -- and the reason its share price took off and could continue higher over the long term.

Aehr still faces serious challenges. Its revenue fell from $66 million in fiscal 2024 to $59 million in fiscal 2025. It slipped from an operating profit of $10 million to a loss of $6 million over that period as the company undertook the challenging task of refocusing its business. However, investors who dig deeper see a very encouraging sign. The company's backlog (orders that have been placed, but not yet fulfilled) jumped to $15 million from $7 million. Aehr also announced several orders received from major hyperscalers over the last couple of months.

It's challenging to value Aehr stock at this time. The company is in a transition period, and while the AI market looks hugely promising, it is still a work in progress. In its heyday, the stock's valuation peaked at 31 times sales, and as recently as August 2023 it traded for 24 times sales compared to 12 times sales today. The AI market could be a gold mine for Aehr, and Aehr stock looks like a terrific buy for investors.

Should you invest $1,000 in Aehr Test Systems right now?

Before you buy stock in Aehr Test Systems, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Aehr Test Systems wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $678,148!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,052,193!*

Now, it’s worth noting Stock Advisor’s total average return is 1,065% — a market-crushing outperformance compared to 186% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 25, 2025

Bradley Guichard has positions in Aehr Test Systems and Amazon. The Motley Fool has positions in and recommends Amazon and Meta Platforms. The Motley Fool has a disclosure policy.