Financial Data and Key Metrics Changes - Revenue for Q2 FY2026 was $9.9 million, down 27% from $13.5 million in the prior year period, primarily due to lower shipments of WaferPaks [26][27] - Bookings in Q2 FY2026 were $6.2 million, compared to $11.4 million in Q1 FY2026, with a backlog of $11.8 million at the end of the quarter [25][26] - Non-GAAP gross margin for Q2 was 29.8%, down from 45.3% a year ago, reflecting lower sales volume and a less favorable product mix [27] - Non-GAAP net loss for the quarter was $1.3 million, or negative $0.04 per diluted share, compared to net income of $0.7 million, or $0.02 per diluted share in Q2 FY2025 [28] Business Line Data and Key Metrics Changes - Wafer-level burn-in engagements expanded with significant progress in production installations across AI processors, flash memory, and silicon photonics [5][7] - Packaged part burn-in systems saw increased demand, with over $5.5 million in orders received for Sonoma systems in Q3 FY2026 to date, exceeding total orders for Q2 [17][25] - The company secured key new device wins for the Sonoma system, expected to drive additional capacity at test houses [17][18] Market Data and Key Metrics Changes - The company anticipates bookings in the second half of FY2026 to be between $60 million and $80 million, primarily driven by AI processors [5][23] - The silicon carbide market is expected to contribute minimally to bookings, while silicon photonics and gallium nitride are also expected to play a role [66] - The demand for semiconductor test and burn-in solutions is driven by the growth in AI and data center infrastructure, with a significant emphasis on reliability testing [21][22] Company Strategy and Development Direction - The company is focusing on expanding into key markets such as AI processors, gallium nitride power semiconductors, and silicon photonics, diversifying its customer base and total addressable market [22] - The strategic partnership with ISE Labs aims to deliver advanced wafer-level test and burn-in services for next-generation high-performance computing and AI applications [8] - The company is reinstating financial guidance for FY2026, expecting revenue between $25 million and $30 million for the second half of the fiscal year [23][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook due to increased visibility across multiple end markets and reinstated financial guidance for FY2026 [6][22] - The company noted that the semiconductor industry is experiencing a fundamental shift towards reliability testing, driven by the increasing complexity of next-generation devices [21] - Management highlighted the potential for substantial revenue growth in FY2027, driven by strong bookings and demand for AI-related products [5][23] Other Important Information - The company ended Q2 FY2026 with $31 million in cash, up from $24.7 million at the end of Q1, primarily due to proceeds from an equity program [29] - The company is participating in several investor conferences to enhance investor relations and visibility [30] Q&A Session Summary Question: What is the potential booking strength of $60-$80 million in the second half of this fiscal year? - Management indicated that the bulk of bookings would come from wafer-level and package part burn-in for AI processors, with minimal contributions from silicon carbide [34] Question: Can the AI processor business expand meaningfully in the coming years? - Management believes the AI business could be measured in hundreds of millions of dollars in a few years, with significant demand for wafer-level burn-in systems [36] Question: What is the expected capacity for manufacturing wafer-level systems? - Management stated that they could potentially manufacture over 20 systems a month if required, indicating strong production capabilities [41] Question: Is there a potential for cannibalization between package and wafer-level burn-in? - Management acknowledged that while there may be some cannibalization, both package and wafer-level burn-in will coexist for a long time, with customers evaluating both options [60][79]

Financial Data and Key Metrics Changes - Revenue for Q2 FY2026 was $9.9 million, down 27% from $13.5 million in the prior year period, primarily due to lower shipments of wafer packs [24] - Non-GAAP gross margin for Q2 was 29.8%, compared to 45.3% a year ago, reflecting lower sales volume and a less favorable product mix [25] - Non-GAAP net loss for the quarter was $1.3 million, or negative $0.04 per diluted share, compared to net income of $0.7 million, or $0.02 per diluted share in Q2 FY2025 [26] - Cash position improved to $31 million at the end of the quarter, up from $24.7 million at the end of Q1 [27] Business Line Data and Key Metrics Changes - Wafer-level burn-in engagements expanded with significant progress in production installations across AI processors, flash memory, and silicon photonics [5][6] - Package-part burn-in systems saw increased demand, with orders totaling more than $5.5 million in the fiscal third quarter to date, exceeding total orders for the entire second quarter [17] - Contact revenues, which include wafer packs and burn-in systems, totaled $3.4 million, representing 35% of total revenue, down from 64% in the same quarter last year [25] Market Data and Key Metrics Changes - The semiconductor test and burn-in market is experiencing growth driven by AI and data center infrastructure, with bookings expected to be between $60 million and $80 million in the second half of FY2026 [5][23] - The company is seeing strong demand for its Sonoma systems, particularly for high-temperature operating life qualifications for AI devices [17][19] - The silicon carbide market is expected to see demand growth, although the company is taking a conservative stance on order expectations [15] Company Strategy and Development Direction - The company is focusing on expanding into key markets such as AI processors, gallium nitride power semiconductors, and silicon photonics, diversifying its customer base and total addressable market [22] - A strategic partnership with ISE Labs was announced to enhance wafer-level test and burn-in services for next-generation high-performance computing and AI applications [8] - The company is reinstating financial guidance for FY2026, expecting revenue between $25 million and $30 million for the second half of the fiscal year [23][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook due to increased visibility across multiple end markets and the reinstatement of financial guidance [6][22] - The company highlighted the importance of reliability testing in the semiconductor industry, driven by the growing complexity and performance requirements of next-generation devices [21] - Management noted that the demand for AI and data center infrastructure is a significant growth driver for the company [4][20] Other Important Information - The company successfully closed the InCal facility and consolidated operations into its Fremont facility, resulting in cost savings [26] - The company raised $10 million in gross proceeds through an equity offering during the quarter [27] - The company plans to participate in several investor conferences in early 2026 to enhance investor relations [28] Q&A Session Questions and Answers Question: What is the potential booking strength of $60-$80 million in the second half of this fiscal year? - The majority of bookings are expected to come from the AI accelerator processor line, with some contributions from silicon carbide and silicon photonics [30] Question: Can you provide insight into the AI processor market's potential growth? - The company anticipates that the AI business could be measured in hundreds of millions of dollars in a few years, with significant demand for wafer-level burn-in systems [31][32] Question: What is the expected capacity for manufacturing wafer-level systems? - The company discussed the potential to manufacture over 20 systems a month if demand requires it, indicating strong production capabilities [36] Question: Will customers transition from package-part burn-in to wafer-level burn-in? - Customers may initially use package-part burn-in and later transition to wafer-level burn-in as they become more comfortable with the technology [50][51]

Financial Performance - Net revenue for Q2 fiscal 2026 was $9.9 million, down 26.67% from $13.5 million in Q2 fiscal 2025[7] - GAAP net loss for Q2 fiscal 2026 was $(3.2) million, or $(0.11) per diluted share, compared to a loss of $(1.0) million, or $(0.03) per diluted share in Q2 fiscal 2025[7] - Non-GAAP net loss for Q2 fiscal 2026 was $(1.3) million, or $(0.04) per diluted share, compared to non-GAAP net income of $0.7 million, or $0.02 per diluted share in Q2 fiscal 2025[7] - Revenue for the three months ended November 28, 2025, was $9,884,000, a decrease of 9.9% compared to $10,969,000 for the same period in 2024[25] - Gross profit for the three months ended November 28, 2025, was $2,545,000, down 31.5% from $3,719,000 in the prior year[25] - Net loss for the three months ended November 28, 2025, was $3,230,000, compared to a net loss of $2,084,000 for the same period in 2024, representing a 55% increase in losses[25] - Non-GAAP gross profit for the three months ended November 28, 2025, was $2,950,000, compared to $4,115,000 in the same period of 2024, a decline of 28.3%[28] - Non-GAAP income (loss) from operations for the three months ended November 28, 2025, was $(2,724,000), compared to $(1,834,000) in the prior year, indicating a worsening of 48.6%[28] - The company reported a GAAP loss before income tax benefit of $4,444,000 for the three months ended November 28, 2025, compared to a loss of $2,836,000 in the same period of 2024, an increase of 56.9%[28] - Basic net loss per share for the three months ended November 28, 2025, was $(0.11), compared to $(0.07) for the same period in 2024[25] Cash and Assets - Total cash and cash equivalents as of November 28, 2025, were $31.0 million, an increase from $24.7 million at August 29, 2025[7] - Total current assets increased slightly to $88,189,000 from $88,778,000, with cash and cash equivalents rising to $30,835,000 from $24,529,000[32] - Cash, cash equivalents, and restricted cash at the end of the period totaled $30,985,000, up from $35,168,000[34] - Net cash used in operating activities was $1,453,000, an improvement from $3,493,000 in the prior year[34] - Cash flows from financing activities provided $9,619,000, significantly higher than $488,000 in the previous year, driven by stock issuance[34] - The company reported a decrease in accounts payable to $3,548,000 from $6,728,000, indicating improved cash management[32] Expenses and Liabilities - Research and development expenses increased to $2,972,000 for the three months ended November 28, 2025, compared to $2,849,000 in the same period of 2024, reflecting a rise of 4.3%[25] - Total operating expenses for the three months ended November 28, 2025, were $7,193,000, a decrease of 7.6% from $7,785,000 in the same period of 2024[25] - Stock-based compensation expense rose to $3,512,000 from $1,945,000, indicating increased investment in employee incentives[34] - Total liabilities decreased to $17,958,000 from $25,637,000, primarily due to a reduction in current liabilities[32] Business Developments - Bookings for Q2 fiscal 2026 were $6.2 million, with a backlog of $11.8 million as of November 28, 2025[7] - For the second half of fiscal 2026, revenue is expected to be between $25 million and $30 million, with a non-GAAP net loss per diluted share between $(0.09) and $(0.05)[19] - Significant progress was made in wafer-level burn-in (WLBI) and packaged-part burn-in (PPBI) segments, with expectations of bookings between $60 million and $80 million in the second half of fiscal 2026[6] - A strategic partnership with ISE Labs was announced to enhance wafer-level test and burn-in services for high-performance computing and AI applications[10] - The company completed development of a new custom high-power fine-pitch WaferPak for AI processors, currently in testing with a top-tier supplier[9] - The Sonoma ultra-high-power PPBI systems received orders totaling more than $5.5 million during the fiscal third quarter to date, exceeding total orders for the entire second quarter[11]

Core Viewpoint - Aehr Test Systems reported weaker-than-expected second-quarter earnings, leading to a decline in stock price despite progress in key operational segments [1][3]. Financial Performance - The company reported a quarterly loss of $0.04 per share, which was in line with consensus estimates [2]. - Quarterly revenue was $9.88 million, missing the Street estimate of $11.59 million by 14.72% and down from $13.45 million in the same period last year [2]. - Bookings for the quarter totaled $6.2 million [2]. - The backlog as of November 28, 2025, was $11.8 million, with an effective backlog, including recent bookings, amounting to $18.3 million [2]. Operational Insights - The CEO highlighted significant progress in wafer-level burn-in (WLBI) and packaged-part burn-in (PPBI) segments, expressing optimism about future prospects despite the revenue shortfall [3]. Stock Movement - Following the earnings report, Aehr Test Systems' stock price fell by 7.75%, closing at $20.94 in extended trading [3].

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Core Insights - Aehr Test Systems has received orders exceeding $5.5 million for its Sonoma ultra-high-power packaged-part burn-in systems during its fiscal third quarter [1] - The orders are from a prominent global Bay Area lab and leading AI companies, indicating strong demand for next-generation systems [1] - The Sonoma systems are designed to support advanced CPUs, GPUs, and high-performance networking processors utilized in AI, data center, and communications applications, with each device capable of reaching up to 2000W [1] Company Summary - Aehr Test Systems specializes in semiconductor test and burn-in solutions, highlighting its role in the semiconductor industry [1] - The company is positioned to benefit from the growing demand for high-performance computing solutions, particularly in AI and data center applications [1] Industry Context - The semiconductor industry is experiencing increased demand for advanced testing solutions due to the rise of AI and high-performance computing [1] - The focus on next-generation CPUs and GPUs reflects the industry's shift towards more powerful and efficient processing capabilities [1]

Core Viewpoint - Aehr Test Systems reported a decline in net revenue for the second quarter of fiscal 2026 compared to the same period in the previous fiscal year [1] Financial Performance - Net revenue for the second quarter of fiscal 2026 was $9.9 million, down from $13.5 million in the second quarter of fiscal 2025, indicating a decrease of approximately 26.67% [1]

Market Overview - U.S. stock futures are broadly lower as investors digest mixed economic signals and corporate news, with the Nasdaq Composite showing some resilience [1][2] - The S&P 500 fell by 0.34% to 6,921.18 points, and the Dow Jones Industrial Average dropped 466 points, or nearly 0.94%, to 48,999.39 points [2] - The Nasdaq Composite rose 0.16% to 23,586.47 points, driven by a surge in technology stocks [2] Economic Indicators - Upcoming economic reports include weekly initial jobless claims, balance of trade data, and preliminary Productivity SAAR Q/Q figures, which are crucial for assessing labor market conditions [4] - The December jobs report, including nonfarm payrolls, is highly anticipated and will influence the Federal Reserve's policy outlook [5] - The CME Group's FedWatch tool indicates an 88.4% likelihood of the Federal Reserve maintaining current interest rates in January [5] Corporate Developments - Alphabet (GOOGL) briefly surpassed Apple's (AAPL) market value, driven by a 2.4% surge in shares, reflecting investor enthusiasm for AI-related stocks [6] - Nvidia (NVDA) is in focus as China may approve purchases of its H200 processors, which has positively impacted Nasdaq 100 futures [6] - Defense contractors are seeing gains after President Trump proposed a $1.5 trillion military budget for 2027, with Lockheed Martin (LMT) gaining 7.2% and Northrop Grumman (NOC) 7.5% in premarket trading [6] - Housing acquisition companies fell after Trump indicated a move to ban Wall Street investors from buying single-family homes, while Zillow (Z) saw an increase [6] - Applied Digital (APLD) rose 7.4% after reporting second-quarter revenue above estimates, and Constellation Brands (STZ) was up 2.3% after exceeding sales and profit expectations [12] - JPMorgan Chase (JPM) declined 2.4% after being downgraded by Wolfe Research [12] Broader Market Context - The U.S. 10-year Treasury yield was slightly down, around 4.13% to 4.15%, while the 2-year Treasury yield was around 3.47% [7] - WTI crude oil futures were trending higher, hovering near $56.16 to $56.22 per barrel, amid geopolitical developments [7] - Gold Spot price decreased to nearly $4,429 per ounce [7] Geopolitical Factors - Ongoing geopolitical tensions are influencing market sentiment, with developments in Greenland and Venezuela being closely monitored [8]

Core Viewpoint - Aehr Test Systems is positioned in the semiconductor testing market, focusing on integrated circuits and AI-related applications, with a stable price target indicating analyst confidence despite recent market volatility [2][6]. Company Overview - Aehr Test Systems (NASDAQ: AEHR) provides test systems for integrated circuits, including logic, optical, and memory types, with products like the ABTS and FOX-P families [1]. - The company's innovative FOX systems and WaferPaks are designed to replace inefficient burn-in processes, offering high-margin solutions [5][6]. Market Performance - The consensus price target for Aehr's stock has remained stable at an average of $29 over the last month and quarter, compared to $26.5 last year, reflecting a steady outlook from analysts [2][6]. - Aehr's stock experienced a significant drop of over 17% on October 7, following a deal with an AI hyperscaler, indicating volatility in the semiconductor industry [4]. Growth Potential - Despite recent downturns, Aehr continues to secure orders in the AI industry, suggesting potential for future growth [3][6]. - The company is currently in a paid evaluation with a leading AI processor supplier, which could lead to substantial orders by fiscal year 2027 [5]. Financial Performance - The recent earnings report showed a decline in revenue to $11 million from $13.1 million the previous year, raising concerns about near-term performance [3]. - Analyst Christian Schwab from Craig-Hallum has set a lower price target of $24, reflecting concerns about the company's order intake and management's lack of guidance [3].

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