Why Aehr Test Systems Stock Is Plummeting Today

Aehr Test Systems (NASDAQ: AEHR) stock is seeing huge sell-offs in Tuesday's trading. The company's share price was down 25.5% as of 11:35 a.m. ET. Meanwhile, the S&P 500 index was flat and the Nasdaq Composite index was down 0.1%.

After the market closed yesterday, Aehr published results for the second quarter of its current fiscal year -- which ended Nov. 29. In addition to sales and earnings performance for the period coming in below expectations, the company also issued forward guidance that disappointed Wall Street.

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

Aehr Test Systems stock falls on disappointing quarterly report

Aehr posted non-GAAP (adjusted) earnings per share of $0.02 on sales of $13.45 million in its second quarter. Unfortunately, the average Wall Street estimate had called for the business to deliver an adjusted profit of $0.03 per share on revenue of $15.03 million. Revenue in the period was down roughly 37% year over year, and earnings per share were down roughly 91% compared to the prior-year period.

While the semiconductor testing equipment specialist's business is subject to cyclical trends, results in the quarter came in worse than anticipated on multiple fronts and suggest that the business could take longer to move through the down part of the current cycle. Aehr recorded bookings of just $9.2 million in the quarter, which is a bearish indicator for near-term sales performance.

What's next for Aehr Test Systems?

For the remainder of the fiscal year, Aehr reiterated its previous guidance for sales of at least $70 million and an adjusted net profit before taxes margin of at least 10%. While management kept its guidance at previous levels, it also issued cautious commentary on the demand outlook for its products.

CEO Gayn Erickson said that the growth outlook for silicon carbide products outside of China in 2025 would likely remain challenging before seeing improvement in 2026. But he also cautioned that geopolitical risks and other factors could hurt its ability to score wins in the Chinese market. On a positive note, the company does expect that testing products and other solutions for artificial intelligence processors will account for a substantial portion of its revenue this year.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $345,467!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,391!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $453,161!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of January 13, 2025

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.