Here's Why Aehr Test Systems Surged Higher This Week
Key Points
The company's end markets have evolved in recent years, shifting from EVs to AI processors.
Management expects significant revenue growth in fiscal 2027, based on its orders and backlog.
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Shares in Aehr Test Systems (NASDAQ: AEHR) rose 20.9% in the week to Friday morning as the market digested its excellent fourth quarter earnings report released earlier in the week. The earnings helped confirm the company's successful transition in revenue away from the electric vehicle (EV) market toward the higher-growth AI processor market.
Why Aehr Test Systems shares soared this week
Aehr makes test equipment and systems that ensure semiconductor reliability and quality. It's a critical part of chip development. Whether it's in an EV or an AI data center, it's essential that chips don't fail. As such, its bookings are often seen as a leading indicator of capital spending trends in its end markets, particularly for AI processors.
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In this context, Aehr had good news for the AI market. Its record bookings of $60.7 million in the quarter brought its second-half bookings to $97.9 million, a figure significantly above the high end of the company's $60 million to $80 million guidance range. CEO Gayn Erickson confirmed that bookings represent growth, noting that "Reliability and production wafer-level burn-in screening for AI accelerators, CPUs, and network processors were our fastest-growing markets this year, representing approximately 71% of our total annual revenue."
In addition, he disclosed that two years ago, "over 95%" of Aehr's business related to silicon carbide chips for EVs, while "our fiscal year '26 revenue came from markets not electric vehicle silicon carbide."
Image source: Getty Images
Where next for Aehr Test Systems
Erickson also confirmed that its lead AI chip customer is "significantly ramping their products." Based on its orders and a $100 million backlog, management expects revenue of $130 million to $150 million in its fiscal 2027 compared to $50 million in 2026, with Erickson claiming Aehr had the capability to meet a large order if it came in.
Aehr is set to return to profitability in its fiscal 2027 and represents a speculative way to invest in the accelerating momentum of AI chip investing.
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Lee Samaha 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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