Why Aehr Test Systems Stock Skyrocketed 46% Last Month and Has Kept Soaring in March
Key Points
After reinstating its guidance for fiscal 2026 in January, Aehr announced significant new contract wins last month.
Sales for the company's wafer-testing and burn-in solutions are accelerating.
Aehr announced another AI-related contract win earlier this month.
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Aehr Test Systems (NASDAQ: AEHR) stock managed to post explosive gains in February despite a bearish backdrop for tech stocks. The company's share price rocketed 46% higher in the month even as the S&P 500 fell 0.9% and the Nasdaq Composite declined 3.4%.
While the broader market saw a pullback in response to tech-sector valuation concerns and macroeconomic news, Aehr stock moved higher thanks to the announcements of new contract wins. The stock is now up 100.5% year to date.
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Aehr stock surged in response to major contract wins
Aehr stock got a big boost after the company published a press release on Feb. 11 announcing that it had secured a significant contract for testing and burn-in systems used for artificial intelligence (AI) chips. The company said that the order for its Sonoma systems came from its lead production customer and would be used for the purchaser's next-generation application specific integrated circuits (ASICs).
Aehr followed the news up with an additional press release on Feb. 26 stating that it had secured a $14 million order from the same customer for its FOX systems, WaferPak contractors, and Automated WaferPak Auto Aligners products for semiconductors used in AI data centers.
The two announcements signal that the company is seeing demand for its AI-related products accelerate and support the thesis that the company could meet or exceed the guidance for the 2026 fiscal year that it reinstated in January. After previously suspending its forecasts in response to tariffs, Aehr has said that it expects sales to come in between $25 million and $30 million this fiscal year -- which ends May 30.
Management also said that customer forecasts and trends indicated that it could record bookings between $60 million and $80 million in this half of the fiscal year. With new orders for its AI-related systems coming in, the company's growth outlook has gotten a lot stronger recently.
Aehr has kept rallying in March
Aehr announced on March 3 that it had received a new order from its top photonics customer for wafer-level test and burn-in solutions for optical architecture used in AI processors. The stock has also gotten support from new jobs data published by ADP showing that the U.S. private sector added 68,000 jobs in February -- topping the consensus estimate's call for 48,000 jobs added in the month.
As of this writing, Aehr is up 8.2% this month and is now valued at approximately 26 times this year's expected sales. That's a highly growth-dependent valuation for a company that's had an uneven performance history over the last several years, but it looks like the company's growth is poised to accelerate rapidly thanks to AI-driven demand.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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