Here's Why Shares in Aehr Test Systems Declined in December, But Looks a Great Buy Now

• Aehr Test Systems is increasing AI related orders astatine an awesome pace.

• The company's halfway marketplace (driven by electrical conveyance development) is apt to rebound astatine immoderate point.

• 10 stocks we similar amended than Aehr Test Systems ›

Shares successful Aehr Test Systems (NASDAQ: AEHR) fell by 12.1% successful December, according to information provided by S&P Global Market Intelligence. The determination comes arsenic galore investors person walked distant from stocks perceived arsenic riskier plays successful the artificial quality (AI) investing theme.

The company's accepted marketplace is successful wafer-level burn-in (WLBI) trial solutions for the silicon carbide (SiC) market. It's a marketplace dominated by electrical vehicles (EVs). Consequently, the company's gross boomed erstwhile automakers invested heavy successful processing EV models to summation relevance successful the increasing automotive sector; however, it started declining erstwhile they pulled backmost aft experiencing disappointing sales.

In response, Aehr is opening up caller markets for WLBI trial systems to customers processing AI processors, including a pb lawsuit described arsenic a "world-leading hyperscaler" that has already placed aggregate orders.

However, the world is Aehr's AI-related gross hasn't offset the declines successful EV-related revenue, and the company's gross continues to diminution portion Aehr is loss-making. For reference, it precocious released its second-quarter earnings, and gross is down to $20.9 cardinal successful the archetypal six months, compared to $26.6 cardinal successful the aforesaid period. Aehr reported a non-GAAP nonaccomplishment of $0.4 cardinal successful the archetypal six months.

Such facts interest a marketplace that's becoming progressively discerning betwixt cash-burning companies, specified arsenic Oracle, which are signing deals to supply services to loss-making companies similar OpenAI, and highly profitable, cash-rich companies similar Alphabet, which are operating successful their halfway competencies.

Unfortunately, the marketplace appears to beryllium lumping Aehr successful with the erstwhile group, astatine slightest for now.

That approach, if taken, would beryllium unfortunate, due to the fact that there's a beardown lawsuit for buying the stock. It's based connected the information that Aehr's AI-related orders are increasing fast, and the EV-related gross is apt to astatine slightest stabilize. For example, absorption precocious disclosed that its backlog was $11.8 cardinal arsenic of Novrember 28, but since past it's grown to $18.3 million, and CEO Gayn Erickson expects 2nd fractional bookings "will beryllium betwixt $60 cardinal and $80 million, which would acceptable the signifier for a precise beardown fiscal 2027 that begins connected May 30, 2026."