This week, Aehr Test Systems experienced an upward surge in its value.
Shares of Aehr Test Systems (AEHR shedding -2.06%) witnessed a 14.5% surge this week, as per data sourced from S&P Global Market Intelligence.
This week's rally was particularly noteworthy, given the severe sell-off that ensued following the Federal Reserve's rate decision and 2025 guidance on Wednesday.
Bucking the market trend, Aehr managed to captivate investors with its intriguing AI-related announcement, sending the stock soaring once more.
First $10 million order in its infancy
Aehr Test is renowned for manufacturing wafer testing and burn-in equipment, which subject semiconductors to high voltages while still on the wafer they're produced upon. This approach contrasts the conventional method of testing fully-assembled modules, which is more expensive.
Testing chips under high voltage and temperature conditions is crucial for applications in automotive and industrial sectors. However, with the significant heat produced by today's state-of-the-art AI processors, Aehr is now focusing on testing AI accelerators as well. And as many investors are aware, the AI chip market is experiencing exponential growth.
On Monday, Aehr announced its acquirement of its first $10 million order from an AI chip client. In the press release, CEO Gayn Erickson highlighted:
This milestone represents a technological and commercial breakthrough for Aehr, broadening the market opportunities for our FOX-XP wafer level test and burn-in systems. This innovative AI customer appreciates the substantial advantages of conducting production test and burn-in at wafer level, prior to integration into the final product.
This order could make a substantial impact on revenue
Prior to securing this order, Aehr was primarily engaged in testing silicon carbide and other automotive chips for electric vehicle manufacturers. The past year has witnessed a substantial slowdown in both the auto and industrial markets, leading to a decline of 36% in revenue and 85% in earnings per share (EPS) in the latest quarter, reported on Aug. 31.
The $10 million order could provide a substantial boost, as the total revenue for the last quarter amounted to just $13.7 million. For the fiscal year ending in May, Aehr anticipates $70 million in revenue.
While Aehr's stock has yet to completely recover from its highs despite this week's surge, the announcement is a significant achievement, as the company may no longer be as dependent on the cyclical automotive market.
Investors are keen on Aehr Test Systems' potential in the AI chip market, given its exponential growth. With the first $10 million order from an AI chip client, Aehr aims to diversify its revenue away from the cyclical automotive market, involving financing and investing in future opportunities in the AI sector.
