Aehr Test Systems: Good Numbers But The Future Growth Is Uncertain (Rating Downgrade)

seekingalpha07-18

Aehr Test Systems reported FY24 numbers positively, showing signs of operational improvement and diversification plans for future growth.FY24 revenues beat expectations, with a significant increase in...

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ljCEO
07-18
ljCEO
只想说这些人说的话真不可信，真的他们会说出来，他们不会自己悄悄的跑？

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAehr Test Systems: Good Numbers But The Future Growth Is Uncertain (Rating Downgrade)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-18 05:51 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4704679-aehr-test-systems-good-numbers-but-the-future-growth-is-uncertain-rating-downgrade><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Aehr Test Systems reported FY24 numbers positively, showing signs of operational improvement and diversification plans for future growth.FY24 revenues beat expectations, with a significant increase in...</p>\n\n<a href=\"https://seekingalpha.com/article/4704679-aehr-test-systems-good-numbers-but-the-future-growth-is-uncertain-rating-downgrade\">网页链接</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"AEHR","symbol_name":"Aehr Test Systems","start_time":0,"source_url":"https://seekingalpha.com/article/4704679-aehr-test-systems-good-numbers-but-the-future-growth-is-uncertain-rating-downgrade","article_id":"2452423113","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2452423113","pubTimestamp":1721253110,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Aehr Test Systems reported FY24 numbers positively, showing signs of operational improvement and diversification plans for future growth.FY24 revenues beat expectations, with a significant increase in","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":["rate"],"viewcount":null,"language":"en","relate_stocks":{"AEHR":"Aehr Test Systems"},"translate_title":"Aehr Test Systems：数字不错，但未来增长不确定（评级下调）","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AEHR":0.9},"content_text":"Aehr Test Systems reported FY24 numbers positively, showing signs of operational improvement and diversification plans for future growth.FY24 revenues beat expectations, with a significant increase in net income due to a tax benefit. Effective backlog also increased, with guidance for FY25 exceeding consensus.The company's diversification plans into new revenue segments, including AI, show potential for growth, but lack of concrete numbers and vague language from management warrant caution.   nicolas_Introduction Aehr Test Systems (NASDAQ:AEHR) recently reported its FY24 numbers, which were met very positively and may be construed as the company finally saw the bottoming of its operations. The company also shed some light on its future endeavors, which involve further diversification and expansion into other product testing segments. I will go through the numbers and some comments on the outlook of the company and whether it would be a good time to add or start a position. Briefly on FY24 Results For the quarter, the company saw revenues of $16.6m, a beat of $1.15m and down 25% y/y. Note that the decline in revenues is not as aggressive as it has been in the previous quarters, which is a sign of improvements on the horizon. GAAP net income came in at $23.9m, or $0.81 per diluted share. This is a massive beat of $0.74 but it was already communicated previously that most of that income was due to the tax benefit of $20.8m and not through the company’s operational improvements. The company’s effective backlog got a nice bump from one of their main customers of around $12m for WaferPak, which was received in the first quarter of FY25, bringing its effective backlog to $20.8m. I think what got everyone excited in the past week about the company is its guidance for FY25, which came in around $2m more than the consensus anticipated. Overall, I believe that there was nothing too exciting in the numbers or the guidance, to be honest. The massive beat on EPS had nothing to do with improvements in operations, and the reaction to the upside was an overreaction, probably caused by the massive short interest in the company and the fact that the company itself finally did not guide lower for once. I also don’t understand why the stock went up another 25% on the earnings release when these numbers were already pre-announced a week ago, when the company saw its share price skyrocket too. Comments on the Outlook I also think that the reaction to the results had something to do with the company diversifying away from just being mainly in silicon carbide, which should lower its concentration risk to an extent. The company still expects its main revenue contributor to be SiC, but now the management is looking at three different revenue generators, each to bring around 10% of total revenues in the near future. These are hard disk drive applications, wafer-level burn-in of GaN power semis that are used in data centers, and of course AI applications. The company mentioned others like silicon photonics ICs used for I/O (Input/Output) communication and flash memory devices in SSDs, but management isn’t certain of the revenue potential from those just yet. Also, the company isn’t certain of the potential of the three mentioned, but they are optimistic that those will yield good results in the end. There was a lot of hedging in the comments about the potential of these revenue segments with words such as “could do”, “could be”, and “could maybe”. These are not very strong tones in my opinion, so I would take that statement with a grain of salt and adjust your expectations. However, the company is heading in the right direction by diversifying, which should in the end convince more investors that its concentration risk is coming down. One of the revenue catalysts that probably got the most attention is the AI part of it. The company also announced it has acquired Incal Technology, which expands Aehr’s product portfolio of test products specifically within the ultra-high-power capabilities for AI accelerators, GPUs, and HPC processors. The deal was for $21m, which consists of $14m in cash and around half a million in AEHR common stock at an average closing price of $12.60. The acquisition is already baked into the company’s FY25 revenue guidance. This was a good acquisition in my opinion. The ever-growing demand for AI may become a much bigger part of the company’s overall revenues, but that will take a while before it can scale its operations. The company is excited about the opportunity within the AI processes for LLMs, which is still in the testing phase, and has said it is working with an AI accelerator company to move its AI processor testing and burn-in to wafer-level, however, what probably was on everyone’s minds is that it was Nvidia (NVDA), unfortunately, the management confirmed it was not. Nevertheless, there is a lot of excitement there, but no concrete numbers yet, so I will be cautiously optimistic for now. In terms of EVs starting to recover, Tesla (TSLA) has had a massive run recently due to beating delivery expectations at the beginning of the month and then getting picked up by momentum and what I assume FOMO and meme traders to rally over 40% in one month. Onsemi (ON) has been a little more cautious about the second-half outlook, citing “We expect customer inventory levels to normalize and the market to stabilize.” So, there does seem to be some sort of stabilization on the way, which should help AEHR to grow its top line at a more acceptable pace than it has in the last few quarters. In summary, I like the diversification ideas that the company has provided here. They all seem to be a positive for the company and lessen concentration risk, however, we cannot be certain how well these will perform since the verbiage management used was vague and no concrete numbers were presented, apart from what these avenues “could” bring in going forward. I would like to see how these perform once they are operational. Is it a buy after the company rallied? I am still holding on to a small position that is about to break even right now. The last time I made assumptions about the company, management was very optimistic about growing revenues to “at least $100m, representing growth of over 50% y/y”. What followed since then were disastrous quarters with many lowered expectations. Back in December, I modeled that the company would reach $102m in FY24, now that number came in at $66m, with FY25 to be at least $70m by the company’s expectation, which is less than half of what I expected for FY25 to be (I said around $160m). My estimates were very off, to say the least. I gave the company a 37% CAGR over the next decade, which I thought was reasonable given how the company was growing in the last three years (at an average of 98%). Now I cannot come up with reasonable forecasts because I need to see a few more quarters to have a better idea of the revenue trajectory going forward, what the new catalysts will bring in, and how the EV sector will recover.  The company mentioned that Incal did around $12m last year, so taking out the acquisition, the company would not be growing. Therefore, it is tough to give some growth numbers that would exceed more than 10%, and that is quite low for a company this size. I am not going to be adding any more shares but will let them ride for a little while longer until at least I see what the recovery looks like. Therefore, I am downgrading to a hold rating for now.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":328800067260696,"gmtCreate":1721297602462,"gmtModify":1721297604543,"author":{"id":"3581848510775779","authorId":"3581848510775779","name":"ljCEO","avatar":"https://static.tigerbbs.com/7d31e0b6030b9d6701634e635b8c529d","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":2,"crmLevelSwitch":1,"idStr":"3581848510775779","authorIdStr":"3581848510775779"},"htmlText":"只想说这些人说的话真不可信，真的他们会说出来，他们不会自己悄悄的跑？","listText":"只想说这些人说的话真不可信，真的他们会说出来，他们不会自己悄悄的跑？","text":"只想说这些人说的话真不可信，真的他们会说出来，他们不会自己悄悄的跑？","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/328800067260696","repostId":2452423113,"repostType":2,"repost":{"id":"2452423113","kind":"highlight","pubTimestamp":1721253110,"share":"https://www.laohu8.com/m/news/2452423113?lang=&edition=full","pubTime":"2024-07-18 05:51","market":"fut","language":"en","title":"Aehr Test Systems: Good Numbers But The Future Growth Is Uncertain (Rating Downgrade)","url":"https://stock-news.laohu8.com/highlight/detail?id=2452423113","media":"seekingalpha","summary":"Aehr Test Systems reported FY24 numbers positively, showing signs of operational improvement and diversification plans for future growth.FY24 revenues beat expectations, with a significant increase in","content":"<html><body><ul><li><a href=\"https://laohu8.com/S/AEHR\">Aehr Test Systems</a> reported FY24 numbers positively, showing signs of operational improvement and diversification plans for future growth.</li><li>FY24 revenues beat expectations, with a significant increase in net income due to a tax benefit. Effective backlog also increased, with guidance for FY25 exceeding consensus.</li><li>The company's diversification plans into new revenue segments, including AI, show potential for growth, but lack of concrete numbers and vague language from management warrant caution.</li></ul><figure><picture> <img fetchpriority=\"high\" height=\"2592px\" sizes=\"(max-width: 768px) calc(100vw - 36px), (max-width: 1024px) calc(100vw - 132px), (max-width: 1200px) calc(66.6vw - 72px), 600px\" src=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg?io=getty-c-w750\" srcset=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg?io=getty-c-w1536 1536w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg?io=getty-c-w1280 1280w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg?io=getty-c-w1080 1080w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg?io=getty-c-w750 750w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg?io=getty-c-w640 640w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg?io=getty-c-w480 480w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg?io=getty-c-w320 320w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg?io=getty-c-w240 240w\" width=\"3872px\"/> </picture><figcaption> <p>nicolas_</p></figcaption></figure><h2><strong>Introduction</strong></h2> <p><strong>Aehr Test Systems (<span>NASDAQ:AEHR</span>) </strong>recently reported its FY24 numbers, which were met very positively and may be construed as the company finally saw the bottoming of its operations. The company also shed some light on its future endeavors, which involve further diversification<span> and expansion into other product testing segments. I will go through the numbers and some comments on the outlook of the company and whether it would be a good time to add or start a position.</span></p> <h2><strong>Briefly on FY24 Results</strong></h2> <p>For the quarter, the company saw revenues of $16.6m, a beat of $1.15m and down 25% y/y. Note that the decline in revenues is not as aggressive as it has been in the previous quarters, which is a sign of improvements on the horizon. GAAP net income came in at $23.9m, or $0.81 per diluted share. This is a massive beat of $0.74 but it was already communicated previously that<span> most of that income was due to the tax benefit of $20.8m and not through the company’s operational improvements. The company’s effective backlog got a nice bump from one of their main customers of around $12m for WaferPak, which was received in the first quarter of FY25, bringing its effective backlog to $20.8m. I think what got everyone excited in the past week about the company is its guidance for FY25, which came in around $2m more than the consensus anticipated.</span></p> <p>Overall, I believe that there was nothing too exciting in the numbers or the guidance, to be honest. The massive beat on EPS had nothing to do with improvements in operations, and the reaction to the upside was an overreaction, probably caused by the massive short interest in the company and the fact that the company itself finally did not guide lower for once. I also don’t understand why the stock went up another 25% on the earnings release when these numbers were already pre-announced a week ago, when the company saw its share price skyrocket too.</p> <h2><strong>Comments on the Outlook</strong></h2> <p>I also think that the reaction to the results had something to do with the company diversifying away from just being mainly in silicon carbide, which should lower its concentration risk to an extent. The company still expects its main revenue contributor to be SiC, but now the management is looking at three different revenue generators, each to bring around 10% of total revenues in the near future. These are hard disk drive applications, wafer-level burn-in of GaN power semis that are used in data centers, and of course AI applications. The company mentioned others like silicon photonics ICs used for I/O (Input/Output) communication and flash memory devices in SSDs, but management isn’t certain of the revenue potential from those just yet. Also, the company isn’t certain of the potential of the three mentioned, but they are optimistic that those will yield good results in the end. There was a lot of hedging in the comments about the potential of these revenue segments with words such as “could do”, “could be”, and “could maybe”. These are not very strong tones in my opinion, so I would take that statement with a grain of salt and adjust your expectations. However, the company is heading in the right direction by diversifying, which should in the end convince more investors that its concentration risk is coming down.</p> <p>One of the revenue catalysts that probably got the most attention is the AI part of it. The company also announced it has acquired Incal Technology, which expands Aehr’s product portfolio of test products specifically within the ultra-high-power capabilities for AI accelerators, GPUs, and HPC processors. The deal was for $21m, which consists of $14m in cash and around half a million in AEHR common stock at an average closing price of $12.60. The acquisition is already baked into the company’s FY25 revenue guidance. This was a good acquisition in my opinion. The ever-growing demand for AI may become a much bigger part of the company’s overall revenues, but that will take a while before it can scale its operations. The company is excited about the opportunity within the AI processes for LLMs, which is still in the testing phase, and has said it is working with an AI accelerator company to move its AI processor testing and burn-in to wafer-level, however, what probably was on everyone’s minds is that it was Nvidia (NVDA), unfortunately, the management confirmed it was not. Nevertheless, there is a lot of excitement there, but no concrete numbers yet, so I will be cautiously optimistic for now.</p> <p>In terms of EVs starting to recover, Tesla (TSLA) has had a massive run recently due to beating delivery expectations at the beginning of the month and then getting picked up by momentum and what I assume FOMO and meme traders to rally over 40% in one month. Onsemi (ON) has been a little more cautious about the second-half outlook, citing “<em>We expect customer inventory levels to normalize and the market to stabilize.”</em> So, there does seem to be some sort of stabilization on the way, which should help AEHR to grow its top line at a more acceptable pace than it has in the last few quarters.</p> <p>In summary, I like the diversification ideas that the company has provided here. They all seem to be a positive for the company and lessen concentration risk, however, we cannot be certain how well these will perform since the verbiage management used was vague and no concrete numbers were presented, apart from what these avenues “could” bring in going forward. I would like to see how these perform once they are operational.</p> <h2><strong>Is it a buy after the company rallied?</strong></h2> <p>I am still holding on to a small position that is about to break even right now. The last time I made assumptions about the company, management was very optimistic about growing revenues to “<em>at least $100m, representing growth of over 50% y/y”. </em>What followed since then were disastrous quarters with many lowered expectations. Back in December, I modeled that the company would reach $102m in FY24, now that number came in at $66m, with FY25 to be at least $70m by the company’s expectation, which is less than half of what I expected for FY25 to be (I said around $160m). My estimates were very off, to say the least. I gave the company a 37% CAGR over the next decade, which I thought was reasonable given how the company was growing in the last three years (at an average of 98%). Now I cannot come up with reasonable forecasts because I need to see a few more quarters to have a better idea of the revenue trajectory going forward, what the new catalysts will bring in, and how the EV sector will recover.</p> <div></div> <p>The company mentioned that Incal did around $12m last year, so taking out the acquisition, the company would not be growing. Therefore, it is tough to give some growth numbers that would exceed more than 10%, and that is quite low for a company this size. I am not going to be adding any more shares but will let them ride for a little while longer until at least I see what the recovery looks like. Therefore, I am downgrading to a hold rating for now.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Aehr Test Systems: Good Numbers But The Future Growth Is Uncertain (Rating Downgrade)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAehr Test Systems: Good Numbers But The Future Growth Is Uncertain (Rating Downgrade)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-18 05:51 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4704679-aehr-test-systems-good-numbers-but-the-future-growth-is-uncertain-rating-downgrade><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Aehr Test Systems reported FY24 numbers positively, showing signs of operational improvement and diversification plans for future growth.FY24 revenues beat expectations, with a significant increase in...</p>\n\n<a href=\"https://seekingalpha.com/article/4704679-aehr-test-systems-good-numbers-but-the-future-growth-is-uncertain-rating-downgrade\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/162267640/image_162267640.jpg","relate_stocks":{"AEHR":"Aehr Test Systems"},"source_url":"https://seekingalpha.com/article/4704679-aehr-test-systems-good-numbers-but-the-future-growth-is-uncertain-rating-downgrade","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2452423113","content_text":"Aehr Test Systems reported FY24 numbers positively, showing signs of operational improvement and diversification plans for future growth.FY24 revenues beat expectations, with a significant increase in net income due to a tax benefit. Effective backlog also increased, with guidance for FY25 exceeding consensus.The company's diversification plans into new revenue segments, including AI, show potential for growth, but lack of concrete numbers and vague language from management warrant caution.   nicolas_Introduction Aehr Test Systems (NASDAQ:AEHR) recently reported its FY24 numbers, which were met very positively and may be construed as the company finally saw the bottoming of its operations. The company also shed some light on its future endeavors, which involve further diversification and expansion into other product testing segments. I will go through the numbers and some comments on the outlook of the company and whether it would be a good time to add or start a position. Briefly on FY24 Results For the quarter, the company saw revenues of $16.6m, a beat of $1.15m and down 25% y/y. Note that the decline in revenues is not as aggressive as it has been in the previous quarters, which is a sign of improvements on the horizon. GAAP net income came in at $23.9m, or $0.81 per diluted share. This is a massive beat of $0.74 but it was already communicated previously that most of that income was due to the tax benefit of $20.8m and not through the company’s operational improvements. The company’s effective backlog got a nice bump from one of their main customers of around $12m for WaferPak, which was received in the first quarter of FY25, bringing its effective backlog to $20.8m. I think what got everyone excited in the past week about the company is its guidance for FY25, which came in around $2m more than the consensus anticipated. Overall, I believe that there was nothing too exciting in the numbers or the guidance, to be honest. The massive beat on EPS had nothing to do with improvements in operations, and the reaction to the upside was an overreaction, probably caused by the massive short interest in the company and the fact that the company itself finally did not guide lower for once. I also don’t understand why the stock went up another 25% on the earnings release when these numbers were already pre-announced a week ago, when the company saw its share price skyrocket too. Comments on the Outlook I also think that the reaction to the results had something to do with the company diversifying away from just being mainly in silicon carbide, which should lower its concentration risk to an extent. The company still expects its main revenue contributor to be SiC, but now the management is looking at three different revenue generators, each to bring around 10% of total revenues in the near future. These are hard disk drive applications, wafer-level burn-in of GaN power semis that are used in data centers, and of course AI applications. The company mentioned others like silicon photonics ICs used for I/O (Input/Output) communication and flash memory devices in SSDs, but management isn’t certain of the revenue potential from those just yet. Also, the company isn’t certain of the potential of the three mentioned, but they are optimistic that those will yield good results in the end. There was a lot of hedging in the comments about the potential of these revenue segments with words such as “could do”, “could be”, and “could maybe”. These are not very strong tones in my opinion, so I would take that statement with a grain of salt and adjust your expectations. However, the company is heading in the right direction by diversifying, which should in the end convince more investors that its concentration risk is coming down. One of the revenue catalysts that probably got the most attention is the AI part of it. The company also announced it has acquired Incal Technology, which expands Aehr’s product portfolio of test products specifically within the ultra-high-power capabilities for AI accelerators, GPUs, and HPC processors. The deal was for $21m, which consists of $14m in cash and around half a million in AEHR common stock at an average closing price of $12.60. The acquisition is already baked into the company’s FY25 revenue guidance. This was a good acquisition in my opinion. The ever-growing demand for AI may become a much bigger part of the company’s overall revenues, but that will take a while before it can scale its operations. The company is excited about the opportunity within the AI processes for LLMs, which is still in the testing phase, and has said it is working with an AI accelerator company to move its AI processor testing and burn-in to wafer-level, however, what probably was on everyone’s minds is that it was Nvidia (NVDA), unfortunately, the management confirmed it was not. Nevertheless, there is a lot of excitement there, but no concrete numbers yet, so I will be cautiously optimistic for now. In terms of EVs starting to recover, Tesla (TSLA) has had a massive run recently due to beating delivery expectations at the beginning of the month and then getting picked up by momentum and what I assume FOMO and meme traders to rally over 40% in one month. Onsemi (ON) has been a little more cautious about the second-half outlook, citing “We expect customer inventory levels to normalize and the market to stabilize.” So, there does seem to be some sort of stabilization on the way, which should help AEHR to grow its top line at a more acceptable pace than it has in the last few quarters. In summary, I like the diversification ideas that the company has provided here. They all seem to be a positive for the company and lessen concentration risk, however, we cannot be certain how well these will perform since the verbiage management used was vague and no concrete numbers were presented, apart from what these avenues “could” bring in going forward. I would like to see how these perform once they are operational. Is it a buy after the company rallied? I am still holding on to a small position that is about to break even right now. The last time I made assumptions about the company, management was very optimistic about growing revenues to “at least $100m, representing growth of over 50% y/y”. What followed since then were disastrous quarters with many lowered expectations. Back in December, I modeled that the company would reach $102m in FY24, now that number came in at $66m, with FY25 to be at least $70m by the company’s expectation, which is less than half of what I expected for FY25 to be (I said around $160m). My estimates were very off, to say the least. I gave the company a 37% CAGR over the next decade, which I thought was reasonable given how the company was growing in the last three years (at an average of 98%). Now I cannot come up with reasonable forecasts because I need to see a few more quarters to have a better idea of the revenue trajectory going forward, what the new catalysts will bring in, and how the EV sector will recover.  The company mentioned that Incal did around $12m last year, so taking out the acquisition, the company would not be growing. Therefore, it is tough to give some growth numbers that would exceed more than 10%, and that is quite low for a company this size. I am not going to be adding any more shares but will let them ride for a little while longer until at least I see what the recovery looks like. Therefore, I am downgrading to a hold rating for now.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":0,"commentSize":1,"repostSize":1,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":false,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"laohu8","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2452423113"}