Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Ticker: AEHR
Current Price: ~$11.32
Market Cap: ~$337 million
Industry: Semiconductor Test Equipment
Investment Thesis
Aehr provides specialized test and burn-in systems for high-demand semiconductor sectors, including silicon carbide (SiC) used in EVs and power electronics. Its proprietary FOX-XP and FOX-P wafer-level systems support wafer-level testing — a critical bottleneck in SiC and 300 mm chip production. As semiconductor demand surges, AEHR offers recurring equipment sales. Profitability and cash flow have returned in 2023 and are strengthening into 2025, positioning it as a potential value opportunity with industry tailwinds.
Business Model & Monetization
- Sales of capital-intensive test-fixtures and burn-in systems (FOX-XP, FOX-P, WaferPak).
- Generates recurring revenues through service contracts, spare parts, and consumables.
- Customers include tier-1 SiC material producers and advanced logic chip fabs seeking early failure detection (wafer-level burn-in).
- High-margin business with 45.7% gross margins in the last twelve months (stockanalysis.com, chartmill.com).
Market Opportunity
Growth driven by SiC demand (EVs, renewables, power electronics) and 300 mm wafer testing.
AEHR’s systems support multiple steps in the wafer lifecycle, making it a potential choke-point vendor.
Even a small market share in the SiC test space (~$1–2B TAM) could suggest meaningful multi-year revenue potential.
Valuation & Earnings Projection (2025–26 Outlook)
| Metric | Q1–Q3 2024 / TTM |
|---|---|
| Revenue | ~$61.5 million |
| Net Income | ~$22.85 million (37.2% margin) |
| EPS | ~$0.78 |
| Gross Margin | 45.7% |
| Cash (as of latest) | ~$29.4 million |
| Debt | ~$6.4 million |
| Net Cash | ~$22.97 million |
With ~$1.2 per share net cash and improving margins, AEHR trades near a ~15× forward earnings multiple — a valuation that may be reasonable when considering strong profitability.
Forward PEG Analysis
Assuming:
Estimated EPS growth from ~$0.78 (TTM) to ~$1.60 by mid-2026 (CAGR ~45%)
Forward P/E at current price = 11.32 ÷ 1.6 ≈ 7.1
Forward PEG = 7.1 ÷ 45 ≈ 0.16
A PEG well below 1 and nearing 0.2 may suggest favorable valuation characteristics for a high-margin, growth-accretive hardware player.
Competitive Advantage
- Unique systems enabling wafer-level test/burn-in — a gap in SiC and advanced logic production.
- Strong gross margins (~45%) and earnings generation differentiates it from most micro-cap hardware peers.
- Design flexibility and modularity allow entry into adjacent markets (memory, logic, photonics).
Financial Overview
- Positive operating earnings and cash flow over the last two quarters.
- Stable net cash cushion of $23 million ($0.77 per share) (marketbeat.com, stockanalysis.com).
- Institutional ownership is high (~65–70%), insider equity aligns with performance.
Short Interest & Float
- Shares Outstanding: ~29.8 million; Float: ~27.9 million
- Short Interest: ~7.25 million shares = 26% of float (fintel.io)
- Days to Cover: ~10–12.6 days (marketbeat.com)
Implication: High short interest in a low-medium cap stock could contribute to price volatility under certain conditions.
Analyst Coverage & Sentiment
- Average 12-month price target: $11.50–$11.73 (range $11.62–$12.08) (fintel.io)
- Recent price target upgrades: Craig-Hallum increased from $12 → $25 following positive conference signaling and OEM interest (finviz.com)
- Maintain a consensus “Buy” rating
The average target implies limited near-term upside (~5%), but upside to $25 (~120%) on execution raises speculative opportunity meaningfully.
Risks & Mitigants
| Risk | Mitigant |
|---|---|
| Semiconductor cyclicality risk | Serving diverse segments (SiC, logic, photonics) |
| Supply chain / execution delays | Modular system sales across multiple end markets |
| Extended valuation drag | Strong profitability and high cash buffer stabilize outlook |
Conclusion
Aehr Test is a rare public micro-cap hardware value play with real earnings, cash flow, and strong margins. Trading at ~15× forward EPS with net cash and forecast earnings growth (45% CAGR), and supported by PEG of ~0.16, it may be undervalued given its niche strength in critical semiconductor infrastructure. Elevated short interest adds volatility and optionality.
This company may interest investors looking for near-term cash flow and long-term growth exposure in semiconductor test equipment.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The author is not a registered investment advisor. All opinions are the author’s own. Readers are encouraged to do their own research and consult with a licensed financial professional before making investment decisions.
