WOLF - New Data Center Chips Could Mean Massive Growth for 1 Tiny Semiconductor Company
Aehr Test Systems (NASDAQ: AEHR) has been on a wild ride. Shares of the tiny chip manufacturing equipment company have been all over the board in the last year as the market tries to get a handle on the company's biggest growth driver right now: The electric vehicle (EV) market. Its latest trick has been a more than 50% bounce following the second-quarter fiscal 2023 earnings update (the three months ended November 2022). Aehr beat financial expectations, but this recent surge in optimism has less to do with EVs and a lot more to do with data centers.
On the surface, Aehr stock's recent run-up has everything to do with the last quarter's results. Revenue was up 54% year over year to $14.8 million, and net income was $3.73 million (compared to just $717,000 last year). Both figures handily beat market analyst predictions as Aehr reported two new customers ramping up production of silicon carbide (SiC) chips, adding fuel to the SiC fire that Aehr's leading customer ON Semi (NASDAQ: ON) , as well as SiC pioneer Wolfspeed (NYSE: WOLF) , have helped start. The EV market is quickly displacing legacy autos, and Aehr's equipment that tests SiC chips needed in EVs could enjoy strong demand for the duration of the 2020s.
However, as a cyclical manufacturing business that relies on hard-to-predict timing of customer orders for equipment, Aehr has been playing coy with investors. Despite a stellar first half of the current fiscal year, CEO Gayne Erickson and the top team have simply reiterated their outlook for full-fiscal year 2023 revenue to be $60 million to $70 million -- implying growth of 18% to 28% from 2022.
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New Data Center Chips Could Mean Massive Growth for 1 Tiny Semiconductor Company