Aehr triples sales and lifts its goal to $150M, but cash slips

Aehr makes burn-in and test equipment for the chip industry.¹ Burn-in means running chips hot and hard for hours so weak ones fail at the factory instead of inside a customer's data center. Its FOX-XP systems test chips while they are still on the wafer, up to 18 wafers at a time. Its Sonoma systems test packaged chips and came with its purchase of Incal Technology.²

Not long ago the business rode chips for electric vehicles and power systems. That share of revenue fell from 92% in fiscal 2024 to 17% in fiscal 2026.¹ Fiscal 2026 revenue fell 15.2% to $50.0 million, and the company lost $7.1 million.² Five customers made up about 70% of that year's revenue, and the largest alone about 26%. Management now pitches burn-in as a growing need for AI processors.³

Aehr paid for its build-up by selling stock. In fiscal 2026 it raised $97.4 million, net, through at-the-market sales, where shares are sold into the market over time, and in April 2026 alone it sold 812,185 shares at an average of $73.87.¹ That program is now fully used.² On July 27, 2026 it filed a new shelf registration that lets it sell common stock, preferred stock, debt or warrants later, with amounts and prices set at each sale.³

Orders had been building. Backlog, meaning orders not yet shipped, rose to $80.6 million at May 29, 2026 from $15.2 million a year earlier.¹ In July the company guided fiscal 2027 to $130 million to $150 million of revenue, with adjusted net income of 18% to 22% of revenue.² It then announced a $22 million follow-on order from its lead AI processor customer in August 2026.³ That same month the chief executive sold 40,000 shares in two trades at about $131 to $132 each, keeping 157,723 shares.⁴ On October 28 a former vice president of infrastructure at Meta Platforms joined the board, which grew from six seats to seven.⁵

The 10-K put the stock's two-year range, through May 29, 2026, at $6.27 to $112.00.¹ In our price file it closed at $107.13 on October 2, 2026, then fell to $54.85 by October 30 as chip stocks sold off.² From October 2 to the last minute of trading on November 2, the big chip fund SMH fell about 19%, and the test-equipment makers Teradyne and FormFactor fell about 42% and 41%.³ A New York Stock Exchange market note said chip and memory stock indexes fell more than 15% in October.⁴ A Benzinga transcript page posted that evening showed Aehr at $59.45, an after-hours price our own file cannot confirm.⁵

On November 2, 2026, Aehr reported its first quarter of fiscal 2027, the three months to September 25.¹ Revenue hit a record $33.0 million, up 200% from $11.0 million a year earlier and 75% from the quarter before.² The year-ago quarter ended August 29, 2025, about a month earlier on the calendar, because Aehr moved its year-end from late May to late June.³

Gross margin, the share of sales left after the cost of building the machines, was 47.5% on reported numbers and 48.5% adjusted.¹ Operating income was $6.0 million, about 18% of sales, against a $1.2 million loss the quarter before.² Consumables, the parts that go into the machines and get replaced, brought in $13.5 million, or 41% of revenue.³

Reported net income was $7.2 million, or $0.21 a diluted share, against a $2.1 million loss a year earlier.¹ The adjusted figure of $9.4 million, or $0.28 a share, adds back $1.9 million of stock pay, a real cost paid in shares, and $0.3 million of acquisition charges, a $2.2 million gap.² Pre-tax income was $6.9 million, and a $254,000 tax benefit pushed net income above it. The finance chief tied that benefit to stock-option sales and vesting share awards, not to sales.³

The quarter before was different: a $1.8 million tax benefit turned a $455,000 pre-tax loss into a $1.4 million profit.¹ This time the profit came from operations. That matters for the $25.1 million of deferred tax assets, which the 10-K valued partly on an expected return to profit in fiscal 2027.²

Cash tells a weaker story. Operations used $3.1 million in the quarter, and after $49,000 of equipment spending, free cash flow, the cash left after running and investing in the business, was also a negative $3.1 million.¹ Since May 29, unpaid customer bills rose $9.2 million to $26.6 million, and inventory rose $11.8 million to $53.1 million.² On the call, the finance chief tied the cash use to long-lead parts bought ahead of expected AI demand. Those parts are a bet: the 10-K warns that excess inventory could bring write-downs.³

Cash, including restricted cash, fell $11.4 million between May 29 and September 25, to $105.1 million.¹ Three items explain nearly all of it: $3.8 million used in the one-month gap from May 30 to June 26, 2026, $3.1 million used in the quarter, and $4.5 million spent buying back vesting shares to pay workers' taxes. Together they come to about $11.3 million.² That gap month, created by the year-end change, had only $638,000 of revenue and a $1.0 million gross loss.³

The balance sheet can carry this for now. Aehr has no debt, and total liabilities were $36.7 million against $105.1 million of cash.¹ So there is no net debt, no interest bill to cover and no loan covenant to trip, and the cash earned $899,000 of net interest in the quarter.² The 10-K said existing cash and expected cash from operations should meet its cash needs.³

Aehr had 32.66 million shares outstanding at September 25.¹ As of July 23, 2026, options on 252,489 shares, at an average strike of $5.81, and 692,905 unvested restricted stock units would add about 3%, for roughly 33.6 million fully diluted shares.² There is no preferred stock. With no debt, common holders stand behind only ordinary bills, such as the $12.5 million owed to suppliers.³

The diluted share count for the quarter was 12% higher than a year earlier, after the stock sales of fiscal 2026.¹ The new shelf sets no amount; the size and price of any sale would come in a later supplement.²

Each exchange of money had two sides. Buyers of the April stock paid $73.87 a share, far above the $51.47 close on November 2, and Aehr got cash that now funds its parts build-up.¹ The $4.5 million buyback of vesting shares went the other way: Aehr spent cash to pay workers' taxes, and those shares stayed out of the count.² Customers, for their part, keep flexibility. Most orders can be canceled or rescheduled with limited penalties, so backlog is a promise, not cash.³

Management's goals for fiscal 2027 are revenue of $150 million, or 200% growth, and adjusted net income of at least 20% of revenue.¹ That profit floor is about $30 million, and it replaces July's range of 18% to 22%.² On the call, managers said second-quarter shipments for the lead hyperscale customer are already in backlog, that the fourth quarter may be the year's highest, and that the goal is not limited by supply.³

They expect consumables to be about 35% of the year's revenue, and second-quarter gross margin to come in below the first quarter's.¹ Aehr is shipping more than a dozen Sonoma systems a month for that lead customer, and a contract maker in Southeast Asia adds room for more than 20 more a month.²

The release also named two new openings. A major AI accelerator and processor supplier will buy a full FOX-XP test cell for a partner plant in Taiwan, install it in early calendar 2027 and decide on high-volume production several months after that.¹ On the call, the chief executive said the customer would have seen the data around January, February and March; the release puts the volume decision within several months after installation and validation.² The lead hyperscale customer also placed follow-on orders for its second AI processor, with a production ramp expected in calendar 2027.³ Management called the new prospect one of the largest burn-in chances Aehr has ever pursued, but the volume decision has not been made.⁴

The goal leaves $117 million to sell in the rest of the year, about $39 million a quarter, against $33.0 million just reported.¹ First-quarter sales times four would be $132 million, short of the goal, so sales must keep growing.² Effective backlog of $109.3 million covers about 93% of what is left, but the release does not say how much of it ships within fiscal 2027. First-quarter orders rose more than 300% from $11.4 million a year earlier.³

Our price data show Aehr fell 6.2%, from $54.85 on October 30 to $51.47 at the November 2 close.¹ Both prices came before the results, which were followed by a 5:00 p.m. call, so the drop is not a reaction to them. The SMH chip fund fell about 2.8% over the same span.²

At $51.47, the 32.66 million shares are worth about $1.68 billion.¹ That is about 11 times the $150 million revenue goal, and the $1.68 billion market value is about 56 times the roughly $30 million adjusted profit floor.² Take away the $105.1 million of cash and the business is valued near $1.58 billion, about 10.5 times the revenue goal and about 53 times the profit floor.³ The price is about 52% below the October 2 close and well below the $73.87 average of April's stock sales.⁴

The bull case is that sales tripled, orders outran sales by about 40%, and the order book already covers most of the rest of the goal.¹ A major new prospect could widen a customer list that a few buyers dominate today, the lead hyperscale customer's second chip could deepen its biggest program, and $105.1 million of cash with no debt pays for the ramp.² After a fall of about 52% from the October 2 close, much of the chip sell-off may already be in the price.³

The bear case, strongest point first. A few buyers decide everything: five customers made up about 70% of fiscal 2026 revenue, and their orders can be canceled with limited penalties.¹ Growth is eating cash, because profit sits in unpaid bills and in parts that could be written down if demand fades. The price also assumes the plan works, at about 56 times the year's adjusted profit floor.² Some customers may build their own package-level systems, and the call said memory-chip work is moving more slowly than expected.³ Quarters can slip, too: in the second quarter of fiscal 2026, revenue of $9.9 million came in softer than the company expected.⁴

The first dated event is the NYC CEO Summit on December 15, where management meets investors.¹ The bigger test is second-quarter results. Revenue below the first quarter's $33.0 million, or receivables growing faster than sales, would weaken the case that this growth turns into cash.² The new prospect's volume decision, which the release expects within several months after installation and validation in early calendar 2027, is the swing factor for growth beyond this year.³ The full-year goal is judged at the year-end on June 25, 2027.⁴

Our call is that second-quarter revenue will top the first quarter's $33.0 million. Shipments for the lead customer are already in backlog and management expects later quarters to grow, but a delayed or rescheduled order could still push sales out.

The release gives $109.3 million of effective backlog but does not say how much of it will ship and count as revenue within fiscal 2027.

Neither the release nor the call gives the value of the FOX-XP test cell the new AI supplier is buying, and neither names that supplier.

The filings give no payment terms or collection timing for the $26.6 million of receivables.

The July shelf sets no amount, and no filing in the window states a plan to use it.