Why Aehr Test Systems Stock Is Up Big Today

Yesterday after market close, Aehr Test Systems (NASDAQ: AEHR) reported fiscal fourth-quarter financials, easily surpassing analysts' expectations and forecasting improving market conditions up ahead.

Investors took note, sending Aehr shares up 22% as of noon ET.

Better-than-expected results

Aehr makes semiconductor testing equipment helpful for chips designed for high-stress environments like electric vehicles (EVs). The stock was a big winner in 2023 as excitement about EVs grew, but has struggled so far in 2024 as automakers pulled back on their electric vehicle expectations.

The company is back in the spotlight after reporting fiscal fourth-quarter earnings of $0.84 per share on revenue of $16.6 million, surpassing Wall Street's consensus estimates of $0.10 in per-share earnings on sales of $15.4 million. The earnings figure included a release of a tax valuation allowance of about $20.8 million. Revenue fell 25% year over year.

"Our full-year revenue and net income results exceeded our previously provided guidance and surpassed analyst consensus," CEO Gayn Erickson said in a statement. "Although we saw customer pushouts of silicon carbide devices due to slower electric vehicle demand in the second half of our fiscal year, we achieved another record year for annual revenue for Aehr."

For fiscal 2025, Aehr said it expects revenue of at least $70 million and a net profit before taxes of at least 10% of total revenue. Wall Street was anticipating revenue of $67.8 million.

Is Aehr stock a buy?

The news is encouraging, but there is still a lot of optimism priced into this stock. Aehr is a relatively small company in terms of revenue but carries a market capitalization of nearly $600 million.

Aehr is well positioned to take advantage of some large macro trends like electrification that should play out over time. But the timing is uncertain, and a lot of that growth is already priced in. Investors should be cautious about buying into this rally.

Lou Whiteman 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 .