Why Aehr Test Systems Rocketed Higher This Week

Shares of Aehr Test Systems (NASDAQ: AEHR) rallied 14.5% this week, according to data from S&P Global Market Intelligence.

This week's move was all the more notable since the market sold off hard in the wake of the Federal Reserve's rate decision and 2025 guidance on Wednesday.

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Defying the market's gravity, Aehr made an exciting AI-related announcement that got the stock moving higher once again.

$10 million in orders in a start

Aehr Test makes wafer testing and burn-in equipment that stresses semiconductors to high voltages while still on the wafer on which they're produced. This differs from the traditional approach of testing finished modules, which is costlier.

Testing chips under harsh voltage and heat conditions is of utmost importance for applications like auto and industrial chips. But with the high amounts of heat produced by today's leading-edge AI processors, Aehr is now targeting testing AI accelerators too. And as investors are well aware, the AI chip market is skyrocketing.

On Monday, Aehr announced that it had received its first $10 million order from an AI chip customer. CEO Gayn Erickson noted in the press release:

This marks a technology and commercial breakthrough for Aehr as it significantly expands the market opportunities for our FOX-XP wafer level test and burn-in systems. This new AI customer recognizes the substantial advantages of conducting production test and burn-in at wafer level, before integration into the final product.

This order could be a big deal to revenue

Prior to this, Aehr had pretty much been limited to testing silicon carbide and other auto chips for electric vehicle customers. Given the severe slowdown in the auto and industrial market over the past year, Aehr had suffered, with revenue down 36% and earnings per share (EPS) down 85% in the last reported quarter ending Aug. 31.

The $10 million order should be a significant boost, as revenue only amounted to $13.7 million in total last quarter. For the year ending in May, Aehr forecasts $70 million in revenue.

Aehr's stock is still down significantly from its highs even after this week's surge. However, the announcement marks a big milestone, as the business may not be quite as beholden to the cyclical auto market anymore.

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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.