How AI Sent Aehr Test Systems Stock Surging Higher This Week

Key Points

• A follow-on deal from its lead customer sent the stock racing higher this week.

• Aehr's core end market will recover in time.

• 10 stocks we like better than Aehr Test Systems ›

Aehr Test Systems (NASDAQ: AEHR) stock rose 41.5% in the week to Friday morning, as investors continued to digest the news of follow-on orders from a major customer that management describes as "one of the premier large-scale data center hyperscalers." It's a big deal for several reasons. Here are a few of them.

Aehr Test Systems' big deal

As previously discussed, the name of the customer hasn't been revealed; however, it's worth noting that Aehr cites Alphabet's Google and Microsoft as customers in its most recent company presentation, and both fit the description outlined by CEO Gayn Erickson in the press release disclosing the deal.

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The deal is significant as it's a follow-on deal from Aehr's "lead production artificial intelligence (AI) processor customer" for eight high-power systems to be "used for volume production test and burn-in of their AI processors." Given the explosion in AI application demand and the ongoing ramp-up in capital spending on developing AI processors, Aehr's orders growth could be in an early innings stage. For reference, both Google and Microsoft are developing their AI processors.

It's an exciting and relatively new market for Aehr, and discussing its potential size on the company's recent earnings call, Erickson said, "You go through the math and the market is 3 to 5x larger than the silicon carbide was."

Image source: Getty Images.

More diversified revenue and earnings

By "silicon carbide," Erickson is referring to Aehr's traditional core business of SiC wafer-level burn-in (WLBI) test equipment. The SiC chip market is driven by electric vehicle (EV) investment, and SiC WLBI accounted for 90% of Aehr's revenue in its fiscal 2024 (the company's fiscal year-end is May 30), but dropped to less than 40% in fiscal 2025 due to a slowdown in EV spending.

As such, the new AI-driven orders are a demonstration of Aehr's ability to open new markets while waiting for the inevitable recovery in the EV market. It adds up to make Aehr an exciting long-term growth stock.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.