After releasing its first-quarter earnings report in early October, market sentiment toward Aehr Test Systems (AEHR) has cooled. The financial report showed that the company’s sales decreased by approximately 15% year-over-year, with a GAAP net loss of $2.1 million. This performance has weakened market expectations for strong growth in fiscal year 2025, and the current stock price has fallen 52% from its 2021 peak. Nevertheless, the company still possesses long-term growth potential, making its investment value worth watching.
Aehr Test Systems’ core business focuses on wafer-level burn-in testing systems for silicon carbide wafers, with about 90% of its revenue coming from the electric vehicle (EV) market. In recent years, due to high interest rates, the phase-out of EV subsidies in some countries, and intensified market competition post-pandemic, investment in the EV supply chain has slowed. This trend is also reflected in the performance of the automotive business of its major customer, ON Semiconductor.
However, the long-term growth trajectory of the EV market remains intact. Ford Motor Company has announced a $5 billion investment plan for electric vehicles, and Tesla has committed to significantly increasing its production capacity and capital expenditure by 2026. As EV sales continue to grow, automakers will need to accelerate the development and production of new models to maintain competitiveness, thereby driving subsequent demand for silicon carbide testing equipment.
Despite short-term performance pressures, Aehr has made positive progress in the field of artificial intelligence (AI) processor testing. The company’s CEO, Gayn Erickson, revealed that a leading hyper-scale data center operator has become a key customer, placing multiple volume production orders and requesting shorter lead times to support the accelerated production of its AI processors. Although the customer was not explicitly named, the company’s earnings report mentioned companies such as Microsoft, Amazon, Google, and Meta Platforms, indicating that Aehr is successfully entering high-growth technology sectors.
From the perspective of the semiconductor testing industry cycle, Aehr’s orders typically appear in the later stages of the investment cycle. Recent earnings from peer company Teradyne show that its business has benefited from growing demand for AI applications and memory testing, with projected fourth-quarter revenue expected to increase by 27% year-over-year. Teradyne’s testing equipment is primarily used in the early stages of chip development, and its strong performance often signals a subsequent recovery in broader industry chain investment. Aehr’s solutions focus on improving chip reliability and quality, and its order recovery may lag behind Teradyne’s but follows a similar growth logic.
Wall Street analysts currently expect Aehr’s sales to remain stable in fiscal year 2026, followed by growth of 37% and 25% in fiscal years 2027 and 2028, respectively. If EV investment recovers and AI spending continues to grow, these forecasts may prove conservative. With its expertise in silicon carbide testing and expansion into AI processor testing, Aehr Test Systems offers growth investors a potential opportunity for upside.
