Aehr Test Systems provides test solutions for testing, burning-in, and semiconductor devices in wafer level, singulated die, and package part form, and installed systems worldwide. Its product portfolio includes FOX-XP and FOX-NP systems that are full wafer contact and singulated die/module test and burn-in systems that can test, burn-in, and stabilize range of devices, including silicon carbide-based and other power semiconductors, 2D and 3D sensors used in mobile phones, tablets and other computing devices, memory semiconductors, processors, microcontrollers, systems-on-a-chip, and photonics and integrated optical devices. The company also offers FOX-CP system, a low-cost single-wafer compact test solution for logic, memory, and photonic devices; FOX WaferPak Contactor, a full wafer contactor capable of testing wafers up to 300mm that enables integrated circuit manufacturers to perform test, burn-in, and stabilization of full wafers on the FOX-P systems. In addition, it provides FOX DiePak Carrier, a reusable temporary package that enables IC manufacturers to perform final test and burn-in of bare die and modules; and FOX DiePak Loader. The company was incorporated in 1977 and is headquartered in Fremont, California.

Aehr Test Systems

Key Points
Major new orders lifted the stock today.
Speculation will turn to who that customer might be, but in any case, Aehr is diversifying its end markets.
Its core end market is likely to return to growth in time.
Shares in Aehr Test Systems (NASDAQ: AEHR) had blasted higher by more than 20% at 10 a.m. today on the news of follow-on orders for its artificial intelligence (AI) processor volume production test and burn-in solutions.
New orders, new optimism?
The news comes less than two weeks after the company released its fourth-quarter 2025 earnings report. Back then, CEO Gayn Erickson took a cautious approach to financial guidance for 2026, saying, "While we remain confident in Aehr's long-term growth prospects, we continue to experience some timing-related delays in order placements due to tariff-related uncertainty, particularly in our first quarter." The order delays, or at least some of them, were cleared much more quickly than Erickson may have expected.
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Aehr's hyperscaler customer
Speculation will now turn to the identify of the "world-leading hyperscaler" that made the orders for eight of Aehr's Sonoma ultra-high-power systems, not least as the orders result in "a more than doubling of the number of production systems with this customer."
It's impossible to know unless Aehr or the customer itself divulges the information. Still, a quick look at Aehr's customer list in its latest investor presentation shows Alphabet's Google and Microsoft -- good places to start looking.
Aehr's long-term growth prospects
In a sense, the customer doesn't matter as much as the fact that Aehr continues to diversify away from the currently challenged silicon carbide (SiC) wafer-level burn-in (WLBI) test solutions market and into new growth markets. The demand for SiC WLBI equipment is primarily driven by electric vehicles, and the softening of investment in EVs is slowing down demand.
However, Aehr's new AI-driven markets will strengthen the company's long-term growth prospects, and it's only a matter of time before EV investment picks up again, leaving Aehr well positioned for long-term growth.
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Here's Why Aehr Test Systems Blasted Higher Today (Hint: It's AI Related)

Not all of the growth stocks featured here will likely deliver outsize returns, so it makes sense to spread portfolio risk around a collection of holdings. In that line of thought, here are 10 growth stock ideas for investors to consider. They range from a couple of high-profile household names, such as Tesla (NASDAQ: TSLA) and Delta Air Lines (NYSE: DAL), to companies like Navitas Semiconductor (NASDAQ: NVTS) and Synopsys (NASDAQ: SNPS), which are less well known.
You might want to consider buying and holding any (or all) of these equities long-term.
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Tesla's robotaxis are a game-changer
The key to the investment case for Tesla lies in its promised robotaxis and unsupervised full self-driving (FSD) software, which is scheduled to launch on a limited basis beginning this week. Tesla is already a highly successful automaker and the dominant player in electric vehicles (EVs) in the U.S., and robotaxis offer the prospect of transforming it into a company able to generate high-margin and recurring revenue from owning its robotaxi fleet or revenue sharing from Tesla's transformed fleet using Full Self-Driving (FSD) software.
There's also the dedicated robotaxi, Cybercab, and the potential to sell FSD on a subscription basis. And all of it will be supported by Tesla's market-leading position in EVs and its ability to develop affordable EVs in the future.
Next-generation data centers
Nvidia partners Navitas Semiconductor and Vertiv (NYSE: VRT) and the next generation of data centers, namely 800-volt (V) high voltage direct current (HVDC), which I've discussed in more detail elsewhere, so investors with the time and inclination can peruse. Nvidia believes they will be more efficient, with lower maintenance costs and significantly lower costs of ownership.
The new data centers, scheduled for 2027, employ a different power conversion method, and Navitas is developing Gallium Nitride (GaN) and Silicon Carbide (SiC) power semiconductors to enable more efficient power conversion in 800V HVDC data centers.
Similarly, another Nvidia partner, and leading data center equipment provider, Vertiv, is developing critical power and cooling equipment and systems for the new data centers and expects to have them available in the second half of 2026, in time for the launch of the 800V HVDC data center in 2027.
What makes both companies particularly interesting is that, unlike their rivals, they are more like pure plays in their end markets. For example, Navitas specializes in GaN and SiC chips for power conversion (not silicon), and 80% of Vertiv's revenue comes from data centers.
Aehr Test Systems is opening up new end markets
Speaking of SiC and GaN chips, Aehr's (NASDAQ: AEHR) stock has soared recently on speculation that Navitas might be a customer for Aehr's testing and burn-in equipment. Aehr's equipment helps semiconductor manufacturers ensure quality and reliability throughout the manufacturing process.
Aehr has struggled recently as its revenue at SiC customers, including ON Semiconductor, has declined in light of pullbacks in EV investment. Still, Aehr is making good progress in opening up and winning customers in new markets, including GaN semiconductors and semiconductors for artificial intelligence (AI) processing.
Synopsys and the future of semiconductors
Synopsys is a leader in electronic design automation software (used to design and verify chips), and its intended acquisition of engineering simulation and analysis company Ansys is a key event. The aim is to create a company offering design software, as well as simulation and analysis software to test the fruits of the design. It will also open up Synopsys' solutions to Ansys' wider range of end-market customers, particularly as semiconductors and electronics are increasingly being embedded in a range of new industries.
Hexcel is the future of aerospace
The advanced materials company's lightweight composites are the future of the aerospace industry, as every new generation of airplane contains more composites. This means Hexcel (NYSE: HXL) can grow as airplane production increases (Airbus and Boeing have multiyear backlogs in place) and new, more composite-rich airplanes are developed.
Hexcel has faced headwinds in recent years as Airbus' and Boeing's delivery rates have fallen short of expectations, but it's only a matter of time before they improve.
Cognex's machine vision has long-term growth prospects
Cognex (NASDAQ: CGNX) is another company with excellent long-term secular growth prospects (the use of machine vision in automated processes) that has suffered near-term headwinds (weakness in key end markets like automotive and consumer electronics). Still, this is a temporary slowdown in a long-term growth story.
PTC, Trimble, and the growing interface between the digital and physical worlds
PTC (NASDAQ: PTC) provides computer-aided design (CAD), product lifecycle management (PLM), and other solutions essential to creating a so-called "digital thread" for a physical product as it moves from design through manufacturing, use, servicing, and ultimately disposal. As such, it's a leading player in the digitization of the industrial sector.
Trimble's (NASDAQ: TRMB) precise positioning hardware (its origins) and growing software/services also make it a leading play on digitization. In Trimble's case, it's about integrating physical positioning with the digital world, such as in construction and infrastructure work, transportation, and geospatial activities. Through the use of advanced analytics in the digital world, Trimble's solutions can be integrated into its customers' daily workflows.
Delta Air Lines is different now
Last but not least, Delta's growing mix of premium cabin revenue, loyalty program, co-brand card remuneration, and ability to adjust and compete in economy tickets when necessary means it's a much more diversified airline than a decade ago. In addition, as a network operator, it's much better positioned to deal with the growing cost pressures in the industry than low-cost carriers. Despite headwinds in 2025, it's ideally placed to generate value for shareholders over the long term.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cognex, Nvidia, Synopsys, and Tesla. The Motley Fool recommends Ansys, Delta Air Lines, Hexcel, ON Semiconductor, PTC, and Trimble. The Motley Fool has a disclosure policy.
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10 Brilliant Growth Stocks to Buy Now and Hold for the Long Term

Shares of electric vehicle makers Tesla (NASDAQ: TSLA), Rivian (NASDAQ: RIVN), and Aehr Test Systems (NASDAQ: AEHR) rallied on Wednesday, up 5.2%, 4.7%, and 15.8%, respectively, as of 11:30 a.m. ET.
There wasn't much company-specific news today, so the across-the-board rally likely had to do with today's important inflation report.
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CPI runs hot, but the important "core" CPI cools
Inflation is a critical factor in demand for autos, as a car is a large-ticket item that is often financed by customers. But interest rates have proven to be especially critical for electric vehicle stocks, given that EVs have up until this point been a bit more expensive, at least up front before maintenance, than traditional internal combustion cars.
In addition, EV stocks tend to be unprofitable or trade at high multiples. Interest rates tend to especially punish high-multiple stocks or unprofitable stocks, as higher rates depress the value of cash flows that are further out in the future, while also making financing a business more expensive.
Thus, today's positive inflation report sparked a "risk-on" rally, including these EV-related stocks. Today, the December Consumer Price Index (CPI) was released.
While the overall CPI came in a bit hotter than expected, "core" CPI figures, stripping out volatile food and energy prices, actually cooled more than expected. The CPI came in at 2.9% year over year and 0.4% month over month, versus expectations of 2.8% and 0.3%, respectively. However, core CPI came in at 3.2% year over year and 0.2% month over month, below the 3.3% and 0.3% expected.
Cool inflation data is critical, as new fears of an inflation reacceleration came to the fore after the Federal Reserve's December meeting and press conference. In that meeting, Fed chair Jay Powell and other officials worried that strong economic data and the Fed's 100 basis points of rate cuts since September may prevent inflation from coming down as quickly as hoped. After that meeting, long-term Treasury rates rose, and expectations for more short-term interest rate cuts fell, suggesting higher interest rates for borrowers of autos.
So, today's "core" numbers coming in cooler than expected generated relief from the fears over higher rates.
Each stock may have also bounced harder, given that each had sold off recently. Tesla enjoyed a post-election pop, thanks to Elon Musk's backing of President-elect Trump, but has since seen a pullback. That pullback was amplified when Tesla reported a miss on its fourth-quarter deliveries in early January. Furthermore, the deliveries implied Tesla would experience its first-ever annual sales decline in 2024.
Rivian actually beat its fourth-quarter delivery target and popped on that news early in the month, but has since retreated amid the concerns about interest rates. Moreover, Rivian was down double digits in 2024, and remains unprofitable as it attempts to get to scale, losing $1.44 billion in the third quarter 2024 alone.
Aehr Test Systems isn't a vehicle manufacturer, but it does make chip testing equipment that is largely centered on silicon carbide chips that go into electric vehicles. Aehr actually reported earnings on Monday that disappointed investors, missing both revenue and earnings expectations, and the stock plunged more than 25%.
Aehr had actually been disclosing new orders from both AI accelerator clients and gallium nitride clients in recent months, highlighting its attempts at diversification. However, the downturn in EVs is still affecting the majority of its existing business. CEO Gayn Erickson noted that silicon carbide investment would remain difficult outside of China in 2025.
Have electric vehicle stocks bottomed?
It's difficult to say whether today's CPI report marks the end of the downturn for EV-related stocks, but it's certainly a positive data point. It's also unclear whether EV demand is totally dependent on interest rates. Early adoption of EVs seems to have slowed, but this could also be due to factors like range anxiety. It's also possible the new administration may repeal the EV tax credit, which could also slow a recovery in EVs.
All in, EV stocks still make for risky bets, especially given their high multiples or unprofitable status. Investors may want to stick with the highest-quality and profitable players in the EV supply chain, which ranges from chips, to parts manufacturers, to OEMs like Tesla and Rivian, to chip testing equipment like Aehr.
Furthermore, investors need to keep track of not only interest rates, but technology innovation and government policy changes as well. It's a difficult sector, but can also lead to big gains if EV adoption reaccelerates.
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Billy Duberstein and/or his clients has positions in Aehr Test Systems. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Why Electric Vehicle Stocks Tesla, Rivian, and Aehr Test Systems Rallied Today

Shares of Aehr Test Systems (NASDAQ: AEHR) rallied today, rising 9.3% as of 11:52 a.m. ET, defying the broader tech market, which was down significantly.
Aehr announced its first-ever order for gallium nitride (GaN) chips today. This order represents an expansion of Aehr's addressable market, which management had predicted. That in turn lends credibility to Aehr's management and thus optimism for the company's future.
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A gallium nitride win
This morning, Aehr put out a press release saying it had secured an order for its Fox WaferPak Aligner testing machines for a customer's GaN chips. GaN is a novel material that offers higher power conversion efficiency than traditional silicon. While not quite as efficient as silicon carbide (SiC), it is also less expensive to produce, making GaN a solid choice for certain applications like fast chargers for consumer electronics as well as some parts of vehicles, data centers, and solar voltaic systems.
Aehr has had a highly concentrated customer base, with one customer accounting for a huge portion of its sales for testing SiC chips. While the use of SiC in electric vehicles and industrial applications will probably grow over the long term, Aehr's management has long been promising more diversification of both customers and applications.
Aehr rose back in early December when it announced its first-ever order for testing of an artificial intelligence (AI) accelerator. With today's announcement, Aehr can say it's not just a pure SiC and electric vehicle (EV) play but a more diversified company with customers producing SiC, GaN, and AI chips.
Aehr has regained credibility
The back-to-back wins in AI accelerators and GaN give management some credibility and have stoked optimism about its long-term plans. Aehr foresees expansion into other types of chips, such as silicon chips for use in photonics.
Aehr's valuation looks expansive today at over 9 times sales, which is high for a hardware company. However, trailing revenue accounts only for SiC customer revenue in an EV downturn. Therefore, Aehr's future sales should look much better.
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Why Aehr Test Systems Rallied Today

With December ticking toward its end, 2024 is just about ready to fall off the calendar. It's been an absolutely wonderful performance stretch for the broader market, and hot tech companies including Nvidia, Palantir, and Apple have rocketed to new valuation highs.
But there are also some great technology stocks out there that are trading well below previous pricing heights, and investors could be doing themselves a disservice by overlooking these great companies.
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If you're on the hunt for investments that can deliver big wins in 2025 and beyond, read on to see why two Fool.com contributors think these beaten-down stocks are great buys right now.
AMD is an undervalued AI stock play
Keith Noonan: Advanced Micro Devices (NASDAQ: AMD) is a designer of central processing units (CPUs) and GPUs for personal computers and data centers. The company's stock is up roughly 182% over the last five years thanks to some solid business execution and excitement that the company could be poised to see some of the same explosive, AI-driven growth that has propelled Nvidia to stellar returns.
On the other hand, AMD has seen a slower ramping for AI-related processors than some investors expected -- and the disconnect in the timeline has caused some significant valuation pullback for the stock. The chip specialist's share price is now down roughly 40% from the lifetime high that it hit earlier this year.
Despite a strong rally for the broader market, AMD stock has tumbled over the last few months -- and the company's share price has yet to recover from sell-offs triggered by its third-quarter earnings release at the end of October. AMD's revenue grew roughly 18% year over year to reach $6.8 billion in the period. Meanwhile, non-GAAP (adjusted) earnings per share rose 31% compared to the prior-year period.
While AMD will continue to have a strong market presence in processors for gaming and personal computers, it's the data center segment that has really become central to the stock's performance. Last quarter saw sales for the AI-related segment increase to $3.5 billion -- up 122% year over year and 25% on a sequential quarterly basis. The performance actually topped Wall Street's expectations and pushed the business to overall sales and earnings beats in the quarter, but some investors and analysts didn't think the company's guidance was bullish enough.
AMD has tended to err on the conservative side lately when it comes to issuing guidance, and it wouldn't be surprising to see significant near-term gains kicked off by Q4 numbers that come in better than broadly expected. But more importantly for long-term investors, the business remains poised to benefit from the unfolding AI revolution.
The company's competitive positioning in the highly lucrative GPU category isn't as as strong as Nvidia's, but AMD's lagging stock performance opens the door for investors who buy shares at today's prices to see big gains.
Aehr Test Systems is a buy for enterprising investors
Lee Samaha: It's fair to say it hasn't been a vintage year for the provider of burn-in testing equipment to the chip industry. Aehr Test Systems (NASDAQ: AEHR) makes silicon carbide chip testing equipment, and its primary growth market comes from its use in electric vehicles (EVs). Silicon carbide chips have qualities that make them more efficient than silicon in power electronics, making them ideal for EVs.
There's little doubt that the adoption of silicon carbide chips will grow, fueling demand for Aehr's solutions. However, growth expectations for both the chips and Aehr's sales have been pared back this year due to the slowing growth of EV sales, which has caused automakers to defer investment in production lines. As a result, the company's share price is down roughly 72% from its lifetime high as of this writing.
Still, the slowdown -- primarily related to relatively high interest rates -- is unlikely to last forever, and no one disputes that EVs are the transportation industry's future. In addition, Aehr recently inked a deal to sell an initial $10 million worth of equipment to an artificial intelligence customer. The agreement helps diversify Aehr's end markets and customer base and de-risks the stock.
With the company successfully opening new end markets and a likely recovery in its EV end markets, Aehr Test Systems has plenty of potential to grow. Now could be an opportune time to buy the stock.
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When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 922% — a market-crushing outperformance compared to 176% for the S&P 500.*
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Keith Noonan has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

2 Stocks Down 40% and 72% to Buy Right Now

In today's video, I discuss Advanced Micro Devices (NASDAQ: AMD) and other semiconductor stocks that long-term investors should keep on their watch lists. To learn more, check out the short video, consider subscribing, and click the special offer link below.
*Stock prices used were the market prices of Dec. 19, 2024. The video was published on Dec. 19, 2024.
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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 $362,166!*
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*Stock Advisor returns as of December 23, 2024
Jose Najarro has positions in Advanced Micro Devices, Aehr Test Systems, Be Semiconductor Industries, Camtek, KLA, Kulicke And Soffa Industries, Lam Research, Nova, Nvidia, ON Semiconductor, Onto Innovation, and VanEck ETF Trust-VanEck Semiconductor ETF. The Motley Fool has positions in and recommends Advanced Micro Devices, Lam Research, and Nvidia. The Motley Fool recommends Be Semiconductor Industries and ON Semiconductor. The Motley Fool has a disclosure policy. Jose Najarro is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

5 Monster Semiconductor Stocks to Hold for the Next 3 Years

Shares in Aehr Test Systems (NASDAQ: AEHR) were up nearly 25% by midday on Monday. The startling increase comes on the day the company announced a landmark $10 million in initial production orders for semiconductor test and burn-in equipment (whereby semiconductors are tested under electrical stress) for an artificial intelligence (AI) customer.
Why the deal matters
It's important for three reasons. First, the size of the deal is significant, not least for a company estimated by Wall Street analysts to generate just $70.8 million in revenue in 2024.
Second, the deal with an AI customer helps diversify Aehr's end-market revenue. The company is known for its role in the silicon carbide chip market used in electric vehicle (EV) power electronics.
This latest deal helps diversify Aehr's end-market revenue streams, and it also confirms the optimism expressed on the fiscal 2025 first-quarterearnings callin October when CEO Gayn Erickson discussed potential orders from an "AI accelerator company" and said, "As we've noted before, based on the production forecast, we believe they could potentially be more than a 10% customer for us this fiscal year alone." Management appears to have delivered on that promise.
Third, Aehr is a company that investors believe carries significant risk due to its customer concentration. For example, in its fiscal 2024, ended May 31, two customers were responsible for 67% and 17% of its net revenue, and it was even more concentrated in 2023 with two customers accounting for 79% and 10% of its revenue.
All it takes is one significant customer to scale back expectations for investment, and Aehr's growth expectations will be slashed. That, in fact, has happened in recent years as relatively high interest rates have negatively impacted electric automaker's capital investment plans.
Growth is just getting started
The deal opens up new markets, and with the possibility of a low interest rate environment improving, or at least stabilizing EV capital investment, the scene is set for Aehr Test Systems to grow strongly in the coming years, and with more diversified revenue and customer streams.
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 $348,112!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,992!*
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $495,539!*
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 December 16, 2024
Lee Samaha 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Why Shares in Aehr Test Systems Shot Higher by 25% Today (Hint: It's AI Related)

In today's video, I will be talking about two small-cap stocks, each with a market capitalization of under $500 million. Check out the short video to learn more, consider subscribing, and click the special offer link below.
*Stock prices used were from the trading day of Oct. 18, 2024. The video was published on Oct. 20, 2024.
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:
Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,285!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,456!*
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $411,959!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
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Neil Rozenbaum 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. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Why Is Everyone Talking About These 2 Small-Cap Stocks?

Shares of Aehr Test Systems (NASDAQ: AEHR) rallied 18% Friday, as of 1:43 p.m. ET.
The maker of wafer-level test and burn-in devices reported earnings for its August quarter yesterday, beating expectations. But more important than reported results was management's commentary that Aehr is penetrating new markets, especially artificial intelligence (AI) accelerators.
Aehr is a small cap with a big opportunity
Last night, Aehr reported earnings for its fiscal first quarter ending in August. While revenue was down 36.5% to $13.1 million, that actually beat analyst expectations, as did the non-GAAP (adjusted) earnings-per-share (EPS) figure of $0.07, which came in well above expectations of $0.01.
Aehr's devices test semiconductors by subjecting them to high voltages on the wafer, simulating rugged conditions they would endure if deployed in the real world.
Testing at the wafer level is a somewhat new endeavor, but makes sense for a lot of new types of power-hungry chips. These include silicon carbide (SiC) chips for electric vehicles and infrastructure, which is Aehr's core market. With the slowdown in electric vehicle sales over the past year, investment in Aehr's systems has declined.
However, on the postearnings conference call CEO Gayn Erickson noted "stabilization and increasingly positive discussions" with the company's SiC customers in recent days. Not only that, but Aehr also received its first orders to test AI accelerators as well. This is an exciting development, as AI accelerators are expected to achieve hypergrowth over the next few years. Given that they draw a lot of heat, it's fair to say AI chips would benefit from wafer-level burn-in testing. In addition, Erickson noted that the company's first Gallium Nitride (GaN) customer would be moving from testing to full production in the year ahead.
Aehr's shares look expensive but revenue could skyrocket
For the fiscal year ending next May, management projects "at least" $70 million in revenue and earnings before taxes of "at least" 10% of revenue. At first glance, that doesn't seem to justify a market cap of $450 million after today's rally.
However, current results are really the bottom of a bad EV down cycle. As that market recovers, new applications in GaN and AI accelerators could add lots of revenue and earnings growth. So, Aehr is a somewhat speculative play that could disappoint, but could also bloom into a multibagger.
Should you invest $1,000 in Aehr Test Systems right now?
Before you buy stock in Aehr Test Systems, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Aehr Test Systems wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,130!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
See the 10 stocks »
*Stock Advisor returns as of October 7, 2024
Billy Duberstein and/or his clients have positions in Aehr Test Systems. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Why Aehr Test Systems Rocketed 18% Higher Today

For those with many years before retirement, it's imperative to be invested in growth stocks. While perhaps more volatile than low-priced value stocks, over a long period of time, high-quality growth stocks have the potential to compound wealth by leaps and bounds.
After the post-pandemic downturn in growth stocks, the AI revolution and the prospect of lower interest rates should reignite growth stocks again. Here are three all-star names trading at very reasonable prices today.
Broadcom
Broadcom (NASDAQ: AVGO) hadn't been given much credit for growth prior to the AI revolution. Up until AI hit big, Broadcom's strategy was to buy highly profitable and stable semiconductor franchises across communications infrastructure, while adding infrastructure software to the mix in recent years. It was really a private equity strategy designed to buy companies, cut costs, and milk profits.
However, the AI revolution and Broadcom's recent acquisition of VMware has lit a fire under its growth prospects. AI turbocharged two of Broadcom's business: One in custom ASICs used by cloud giants for their own in-house accelerators, and another in high-speed ethernet networking chips and optical components. Each of those businesses grew between three and four times over this year relative to 2023, which is stunning growth.
And with its massive VMware acquisition closing late in 2023, management not only managed to cut costs, but also accelerate VMware's growth at the same time. By innovating a new data center virtualization platform, concentrating on the largest enterprises with the deepest pockets, and charging a premium, management has grown VMware's quarterly revenue from $2.1 billion to $3.8 billion in a span of just two quarters, even as operating costs went down!
Though AI chips and VMware are bound to decelerate, their growth should still be strong for years to come. Meanwhile, these high-growth businesses will soon combine to exceed 50% of Broadcom's total revenue. With AI chips and VMware underpinning growth and the appetite for more acquisitions across both hardware and software, Broadcom is still a buy even near its all-time highs.
Sea Limited
Southeast Asian e-commerce, fintech, and video game giant Sea Limited (NYSE: SE) was a darling of the pandemic, but fell on hard times afterwards. Its hit mobile game Free Fire saw declines in users and monetization and a ban in India over geopolitical concerns, while higher interest rates lowered growth in its other businesses.
However, management showed its agility by cutting costs and achieving profitability by early 2023, within a year after interest rates spiked.
Now with profitability stabilized and inflation coming down, Sea is achieving a happy medium between the hypergrowth pandemic era and the slower but more profitable period thereafter.
The most recent quarter showed solid growth across all three businesses. The Shopee e-commerce platform grew revenue 33.7%, digital financial services grew 39.5%, and the digital entertainment segment returned to growth after bottoming last year, with bookings up 21.1%. And despite a return to reinvesting in growth especially in e-commerce, the company remained profitable overall on a GAAP basis.
Sea seems to have solidified a leadership position over rivals in Southeast Asia's digital economy, which should see strong growth in the years ahead. According to Bain & Co., Southeast Asia's economy is projected to grow at a 5.1% average rate over the next 10 years, even outpacing China.
With Sea's stock trading at just 3.5 times sales and still 78% below its 2021 highs, it's another growth stock ready to break out again.
Aehr Test Systems
Aehr Test Systems (NASDAQ: AEHR) makes test and burn-in equipment mainly used to test automotive chips, especially new silicon carbide chips increasingly used in new electric vehicles. Test and burn-in equipment allows chip manufacturers to subject chips to rugged heat conditions while still on the wafer before they are packaged into a device. Hence, why the technology has generally been used in chips that need to function in challenging conditions, such auto an industrial chips.
Yet while the EV market boomed in recent years, it entered a severe downturn about a year ago. Hence, why Aehr Test Systems is down 78% from its July 2023 highs.
Still, if one thinks the EV market will eventually bounce back, perhaps helped along by lower interest rates, then Aehr could be a bargain buy.
Not only that, but the company recently made a consequential announcement for revenues beyond just EVs. On Sept. 5, the company announced it had received an order of six Sonoma machines to test the AI accelerators of a large cloud infrastructure player. This is the first-ever order of Aehr's machines for AI accelerators.
Given the increasingly energy-hungry and heat-generative nature of AI chips, it's quite possible Aehr's solutions may be adopted not only by this AI company in greater numbers, but other AI players as well. Given AI's hypergrowth prospects, Aehr may have another great growth segment on its hands, making the recent swoon potentially a terrific buying opportunity.
Should you invest $1,000 in Broadcom right now?
Before you buy stock in Broadcom, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Broadcom wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $710,860!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
See the 10 stocks »
*Stock Advisor returns as of September 23, 2024
Billy Duberstein and/or his clients have positions in Aehr Test Systems, Broadcom, and Sea Limited. The Motley Fool has positions in and recommends Sea Limited. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Aehr Test Systems

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