Good day,
We are excited to introduce you to a new way to receive The Early Bird's "Stock of the Day" a day before the stock idea shows up in The Early Bird's email newsletter.
Our free "Stock of the Day" service is delivered via SMS so that you can see each stock pick right away.
Each morning, you'll receive:
- Actionable stock picks, hand selected by MarketBeat's team of expert research analysts.
- Headlines and market insights for each selected ticker.
- A bull case and a bear case to help inform your next move.
- Timely updates and alerts so that you can capitalize quickly on each opportunity.
Ready to take your investing and trading to the next level?
Click Here to Receive The Early Bird's Stock of the Day (Free)
Best regards,
The Early Bird Team
After AI Hyperscaler Deal, Is Aehr Test Systems Stock on Sale?
Written by Leo Miller. Published 10/9/2025.
Key Points
- Aehr Test Systems absolutely surged in August and September after the company announced new orders from its main AI hyperscale customer.
- However, Aehr's latest earnings did not impress markets despite beating estimates, sending shares down steeply.
- Is there now an attractive entry point in AEHR, or does the company need to show investors more considering its current valuation?
After posting its largest single-day gain of 2025, small-cap chip stock Aehr Test Systems (NASDAQ: AEHR) reversed course sharply. On Oct. 7, shares closed down more than 17% as investors digested the company’s latest earnings report. The drop follows a late-August announcement that sent shares up almost 36% in one day: Aehr said it had received follow-on orders for its Sonoma systems from a major artificial intelligence (AI) hyperscaler, raising hopes the company could ride the AI growth wave.
Below are the key takeaways from Aehr’s latest results and what they mean for investors: did the recent pullback create a buying opportunity in this headline-grabbing name?
Aehr Beats Estimates, But Lack of Guidance Disappoints
Meet the ChatGPT of Marketing - And It's Still Just $0.81 a Share (Ad)
Think Google/Facebook-style targeting, but smarter, faster, and built for the next era of AI. Major Brands across entertainment, healthcare, and gaming are already using RAD Intel, and the company has backing from Adobe and insiders from Meta, Google, and Amazon.
Lock in $0.81 shares todayAehr released its fiscal Q1 2026 financial results on Oct. 6, reporting revenues of $11.0 million, down 16% from $13.1 million a year earlier. Revenues were slightly above Wall Street estimates of $10.8 million. The company also posted adjusted earnings per share (EPS) of $0.01, in line with analysts’ estimates. Despite these modest beats, the stock experienced a sharp sell-off—an outcome that becomes clearer after reviewing several underlying factors.
Importantly, Aehr did not provide guidance for the next quarter or the full fiscal year, citing tariff-related uncertainty as a primary reason. That concern is understandable: roughly 63% of Aehr’s revenues came from Asian customers in fiscal 2025. Meanwhile, implementation of large tariffs has been delayed until Nov. 10 to allow for negotiations, and 40% “transshipment” levies are affecting some Southeast Asian countries, adding to the company’s visibility issues. With so much uncertainty, management chose not to give financial forecasts, and the resulting lack of forward visibility disappointed investors.
Aehr’s Hyperscale Orders Fail to Make a Big Impact
The previously announced hyperscaler order also didn’t move bookings or backlog as much as the market had hoped. Bookings were $11.4 million and backlog $15.5 million, only modest increases from $11.1 million and $15.2 million in fiscal Q4 2025. Because the stock jumped so sharply on the announcement, investors were likely expecting a more pronounced improvement in these metrics.
Aehr is still in the early stages of capitalizing on AI demand. Following its July 2024 acquisition of Incal, the company obtained the Sonoma product that has attracted hyperscaler interest. With that acquisition just over a year old, management may need more time to translate the product into material financial gains. AI already represented about 40% of total sales last year after going from essentially 0% the previous year, but absolute AI revenues remain relatively small and have been partially offset by declines in other markets, such as silicon carbide customers. Aehr believes the AI opportunity could be three to five times larger than its silicon carbide market, which suggests a path to upside if execution continues.
AEHR: Valuation Comes Closer to Earth, But Isn’t Highly Attractive Yet
Heading into the earnings release, Aehr traded at a lofty valuation without strong revenue visibility or a clear bookings ramp to justify it. The stock was near a 17x price-to-sales (P/S) ratio—among the highest in a group of about 80 U.S. chip stocks with trailing 12-month revenues of $50 million or more—after its post-announcement rally that included a 36% single-day gain and additional upside afterward.
As of the Oct. 7 close, the stock traded at roughly a 14x P/S ratio. That’s a meaningful decline from its peak, but the multiple remains high relative to many peers. Aehr has announced promising wins, yet they have not yet translated into substantial financial results. The company remains in the proving stage of its AI transition, and its value proposition—helping customers find failing chips before they enter service—remains compelling. If Aehr can demonstrate broader, sustained traction in AI markets, the shares could have significant upside; until then, it’s a name worth watching closely.
We empower individual investors to make better financial decisions by providing real-time financial information and best-in-class investment research.
This message is a sponsored email sent on behalf of The Early Bird, a third-party advertiser of MarketBeat. Why did I receive this email?.
If you need help with your subscription, please don't hesitate to email MarketBeat's U.S. based support team at contact@marketbeat.com.
If you would like to unsubscribe or change which emails you receive, you can manage your mailing preferences or unsubscribe from these emails.
Copyright 2006-2025 MarketBeat Media, LLC.
345 North Reid Place #620, Sioux Falls, South Dakota 57103. USA..
Post a Comment
Post a Comment