New
Here's Why Shares In Aehr Test Systems Fell This Week
Shares in semiconductor testing equipment company Aehr Test Systems (NASDAQ: AEHR) slumped by 8.6% in the week to Friday morning. The move came as the market digested the news of Chinese start-up DeepSeek's release of its updated artificial intelligence (AI) models.
Why it matters to Aehr Test Systems
The news is relevant to the company because investors hope that growth in the AI processor market (Aehr recently signed up its first AI customer) will help offset weakness in its core silicon carbide chip market over the near to medium term.
Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
DeepSeek's low-cost AI solutions threaten U.S. AI companies and, in turn, the companies that provide them with infrastructure and technology solutions. This includes the AI processors that need the wafer-level burn-in test equipment Aehr offers. Indeed, Aehr wants to grow into this market to help diversify its revenue streams.
Aehr's core market (traditionally about 90% of its revenue stream) is the silicon carbide wafer-level test and burn-in equipment market. This market is dominated by demand for electric vehicles (EVs) and EV charging networks, contributing 70% of market demand.
Unfortunately, it's a market whose near-term growth is challenged by disappointing EV sales due to ongoing relatively high interest rates. Indeed, management already told investors on an earnings call this year that "growth in silicon carbide sales outside of China should remain challenging before recovering in calendar 2026."
Image source: Getty Images.
Aehr Test Systems in 2025
There's a healthy bull-and-bear debate over Aehr Test Systems, and the bull case suffered a setback this week. Still, it's not clear that the growth of DeepSeek's AI won't actually lead to a pickup in the adoption of AI applications. That would probably be more of a plus than a negative for AI processor companies and, in turn, Aehr's efforts to sell into it.
Should you invest $1,000 in Aehr Test Systems right now?
Before you buy stock in Aehr Test Systems, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Aehr Test Systems wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $763,921!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of January 27, 2025
Lee Samaha 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.
