Aehr Test Systems (AEHR) Earnings Analysis and Implications for Semiconductor Test Equipment Industry Investments

Aehr Test Systems released its fiscal 2026 second quarter results on January 8, 2026, for the period ended November 28, 2025, which significantly missed market expectations [0]. Key financial data is as follows:

The company also disclosed cumulative results for the first half of FY2026: Net revenue of $20.9 million, a year-over-year decrease of 21.4%; GAAP net loss of $5.3 million, a significant deterioration from the $0.4 million loss in the same period last year [0].

Following the earnings release, AEHR’s stock fell 6.12% in after-hours trading, reflecting the market’s negative reaction to the missed earnings expectations [0]. Over longer timeframes, the stock has risen 49.64% over the past six months, 37.91% over the past year, but declined 12.19% over the past three months, indicating significant volatility.

The chart above shows AEHR’s stock price trend over the past 90 trading days, clearly depicting the noticeable decline following the earnings release, as well as the rally driven by AI theme speculation prior to that.

Management stated during the earnings conference call that the company is in a critical transition period from the traditional silicon carbide (SiC) power semiconductor market to emerging areas such as AI processors and data center chips [0]. The impacts of this transition are reflected in several dimensions:

1. Unwinding of Customer Concentration Risk
   : Previously, the company’s revenue was highly dependent on SiC test equipment for new energy vehicles; as the growth rate of the new energy vehicle market slows, related orders have declined.
2. New Business Order Cycle
   : Products targeting new areas such as AI processors, silicon photonics, and high-bandwidth memory are still in the customer validation and low-volume production stage, with mass order adoption requiring a 6-12 month lead time.
3. Integration Cost Pressure
   : Following the acquisition of Incal Technology’s Sonoma product line in August 2024, the company is still in the integration phase, and related expenses are creating pressure on short-term performance.

Despite near-term performance pressure, the company’s order backlog signals positive momentum:

• Quarterly New Orders
  : $6.2 million
• Order Backlog
  : $11.8 million
• Total Active Backlog (including new orders)
  : $18.3 million
• Cash and Cash Equivalents
  : $31 million, an increase of $6.3 million from the previous quarter [0]

Management stated on the conference call that new orders in the second half of FY2026 are expected to reach $60 to $80 million, which will lay the foundation for strong growth in FY2027.

According to the latest forecast from Semiconductor Equipment and Materials International (SEMI), 2025-2027 will be a historic growth cycle for the semiconductor test equipment industry [1][2]:

1. Surge in AI Processor Demand
   : The testing complexity of data center AI accelerators, GPUs, and CPUs continues to increase, with single-chip testing time extended by 30%-50%, driving a doubling of test equipment demand.
2. Popularization of Advanced Packaging Technologies
   : The adoption of technologies such as 2.5D/3D packaging and CoWoS has complicated testing processes, raising higher requirements for both wafer-level and package-level test equipment.
3. Increasing Reliability Requirements for Automotive-Grade Chips
   : As electric vehicle penetration continues to rise, demand for reliability testing of power semiconductors and sensors is growing.
4. Accelerated Commercialization of Silicon Photonics
   : Data center optical interconnection and AI chip photonic-electronic fusion solutions are driving demand for silicon photonics test equipment.

SEMI’s report also notes that industry growth is constrained by the following headwinds [1][2]:

• Persistently weak consumer electronics market demand
• Extended inventory adjustment cycle for automotive and industrial chips
• Overcapacity in some mature process nodes

Aehr Test Systems’ earnings performance reveals several key logics for investing in the semiconductor test equipment industry:

The lesson from Aehr Test Systems’ previous over-reliance on the single silicon carbide market indicates that investors should focus on:

• The diversification of the company’s customer structure
• The breadth of product line coverage across end markets
• Technological reserves in high-growth areas such as AI chip testing

For semiconductor test equipment companies, the following financial metrics are recommended for focused monitoring:

Aehr Test Systems’ current valuation metrics are as follows [0]:

• Price-to-Sales (P/S)
  : Approximately 34x based on TTM revenue
• Price-to-Earnings (P/E)
  : -77.03x (due to net loss)
• Price-to-Book (P/B)
  : 5.22x

Considering the company is in a business transition period with expectations of large AI test equipment orders, the current valuation may have fully priced in short-term performance pressure. For investors with higher risk tolerance, the following catalysts are worth monitoring:

1. Q3 FY2026 Earnings Report
   (expected in April 2026): Verify management’s guidance of $60 to $80 million in new orders for the second half of FY2026
2. Large-Scale Order Landing from AI Clients
   : WaferPak validation results from core AI clients
3. Sonoma System Capacity Expansion
   : Mass production progress of the fully automated Sonoma platform

Based on the above analysis, the following investment recommendations for the semiconductor test equipment industry are proposed:

1. Short-Term Performance Volatility Does Not Alter Long-Term Growth Trend
   : Aehr Test Systems’ earnings miss mainly reflects the order gap during its business transition, rather than a deterioration of industry fundamentals.
2. AI-Driven Structural Growth in Test Equipment Demand
   : SEMI data shows that the semiconductor test equipment market will grow by 48.1% in 2025, with AI chip testing as the core incremental driver [1][2].
3. Focus on Companies with Diversified Product Lines and Core Technical Capabilities
   : Against the backdrop of overall industry growth, individual company differentiation will intensify; stock selection should focus on enterprises with technological barriers and high-quality customer resources.
4. Post-Earnings Stock Pullback May Present an Entry Opportunity
   : AEHR’s stock fell 6.12% following the earnings release; if subsequent order verification exceeds expectations, there is potential for valuation recovery.

• Uncertainty in AI Capital Expenditure Cycles
  : If major cloud service providers cut AI infrastructure investment, test equipment demand may fall short of expectations
• Customer Concentration Risk
  : Aehr Test Systems has a high degree of dependence on leading AI clients
• Technological Iteration Risk
  : Changes in testing technology routes may impact the competitiveness of existing products
• Macroeconomic Risks
  : Persistent weakness in consumer electronics and automotive demand may spread to the upstream equipment sector

[0] Jinling AI - Aehr Test Systems (AEHR) Financial Data and Company Profile (API Data)

[1] SEMI - Global Semiconductor Equipment Sales Projected to Reach a Record of $156 Billion in 2027 (https://www.semi.org/en/semi-press-release/global-semiconductor-equipment-sales-projected-to-reach-a-record-of-156-billion-dollars-in-2027-semi-reports)

[2] PRNewswire - Global Semiconductor Equipment Sales Projected to Reach a Record of $156 Billion in 2027 (https://www.prnewswire.com/news-releases/global-semiconductor-equipment-sales-projected-to-reach-a-record-of-156-billion-in-2027-semi-reports-302640433.html)

[3] Aehr Test Systems - Q2 FY2026 Earnings Press Release (https://www.aehr.com/2026/01/aehr-test-systems-reports-fiscal-2026-second-quarter-financial-results-and-reinstates-guidance-driven-by-improved-visibility-for-ai-processor-and-data-center-semiconductor-test-and-burn-in-systems/)

[4] Seeking Alpha - Aehr Test Systems Q2 2026 Earnings Call Transcript (https://seekingalpha.com/article/4858210-aehr-test-systems-inc-aehr-q2-2026-earnings-call-transcript)