Aehr Test Systems (AEHR): Valuation in Focus After Q1 Earnings Beat and Share Price Drop

Aehr Test Systems just released its fiscal Q1 2026 results, showing both revenue and net income declines from the previous year. Shares slipped sharply after the announcement, but there is more to consider here.

See our latest analysis for Aehr Test Systems.

Even with Friday’s steep drop, a 17.38% one-day share price decline after Q1 results, the bigger picture for Aehr Test Systems remains more nuanced. Over the past year, the company delivered a remarkable 108% total shareholder return, driven by momentum in AI-driven semiconductor testing and hefty customer orders. While short-term nerves surfaced post-earnings, long-term investors have been rewarded by this growth story as the company pivots to capitalize on surging demand in AI and data centers.

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With shares suddenly back near $26, the question is whether Aehr Test Systems is now trading at a discount after the recent selloff, or if the market is already factoring in the company’s ambitious growth prospects in AI and data centers.

Most Popular Narrative: 30.1% Undervalued

According to Zwfis, the current market price sits well below their fair value estimate. This gap suggests potential in Aehr Test Systems if certain business execution goals are achieved.

There are a couple of reasons that I like this stock, but I still need to look more into it. However, I do currently own some shares. As of right now AEHR is in a good position with AI about to explode in the near future if they can make sure to best utilize their products so they can be most efficient in bringing in revenue. The demand is there, we just need to see if they can step up.

Read the complete narrative.

Curious how a high profit margin and ambitious growth targets could reshape Aehr’s valuation outlook? The narrative pulls together financial metrics and AI market trends for an eye-opening take. Discover which crucial assumptions drive the bold fair value projection.

Result: Fair Value of $37.42 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, weaker future earnings or slower adoption in key AI markets could quickly undermine the bullish case for Aehr Test Systems' long-term upside.

Find out about the key risks to this Aehr Test Systems narrative.

Another View: High Market Expectations

Looking through another lens, Aehr Test Systems appears expensive compared to its peers and the industry. Its price-to-sales ratio is 13.8 times, which is far above the US semiconductor industry average of 4.9 times and the peer average of 2 times. The market could eventually move toward a fair ratio of 4.6 times, highlighting a sizable valuation risk if growth expectations are not met. Does this premium signal confidence, or is the market getting ahead of itself?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Aehr Test Systems Narrative

If you see the story differently or want to dig into the numbers yourself, you can craft your own narrative quickly and easily. Do it your way

A great starting point for your Aehr Test Systems research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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