Aehr (AEHR) Q2 2026: AI Burn-In Bookings Set Up $80M Surge, Diversifying Beyond EV Slowdown
Aehr’s Q2 revealed a sharp pivot toward AI processor test and burn-in, with bookings visibility between $60M and $80M for the second half, signaling a structural shift away from EV-centric revenue. While near-term revenue softness and margin compression weighed on results, management’s reinstated guidance and detailed customer forecasts point to a strong recovery and multi-year AI-driven expansion. Investors should focus on the accelerating transition from legacy silicon carbide to diversified AI, memory, and photonics end-markets, as Aehr’s unique wafer-level and package-level solutions gain strategic traction.
Summary
- AI Burn-In Demand Accelerates: Customer forecasts for AI processor testing are driving record bookings visibility into fiscal 2027.
- Legacy EV Exposure Fades: Revenue concentration is shifting away from silicon carbide and electric vehicles toward diversified semiconductor verticals.
- Multi-Platform Positioning: Proprietary wafer-level and package-level systems are becoming the go-to for next-gen reliability testing, expanding Aehr’s addressable market.
Performance Analysis
Second quarter revenue fell sharply as Aehr’s legacy wafer pack shipments declined and gross margin contracted on less favorable mix, reflecting the ongoing transition from EV-centric silicon carbide to higher-potential growth areas. Contacted revenues, including consumables, fell to 35% of total from 64% a year ago, underscoring the reduced contribution from high-margin silicon carbide burn-in for electric vehicles. Meanwhile, Sonoma system demand from hyperscaler and AI customers partially offset the decline, with bookings momentum rebounding early in Q3 due to a $5.5M order from a premier Silicon Valley test lab.
Operating expenses declined modestly due to lower personnel costs, but R&D spending remained elevated as Aehr invests in AI benchmarks and next-gen memory programs. The company posted a non-GAAP net loss, but cash reserves increased to $31M, bolstered by disciplined use of its at-the-market equity program. Backlog grew to $18.3M with early Q3 bookings, providing improved near-term visibility. Management reinstated guidance for second-half revenue of $25M to $30M, with bookings expected to outpace revenue and set up a strong fiscal 2027.
- Revenue Mix Shift: Legacy wafer pack and silicon carbide revenue fell, while AI-related system bookings gained momentum.
- Margin Compression: Lower sales volume and less favorable mix drove gross margin down nearly 16 points YoY.
- Bookings Visibility: Second-half bookings forecast of $60M–$80M is heavily weighted to AI processor burn-in, dwarfing other segments.
Despite near-term softness, the company’s pipeline and order forecasts signal a pending inflection as AI, memory, and photonics customers ramp multi-year capacity investments.
Executive Commentary
"Based on customer forecasts recently provided to AIR, we believe our bookings in the second half of this fiscal year will be between $60 million and $80 million, which would set the stage for a very strong fiscal 27 that begins on May 30th."
Gane Erickson, President and Chief Executive Officer
"Including this recent bookings, our effective backlog has now grown to $18.3 million, providing increased visibility as we move through the remainder of fiscal 2026."
Chris Ciu, Chief Financial Officer
Strategic Positioning
1. AI Processor Burn-In as the New Growth Engine
Aehr’s shift from EV-dominated silicon carbide to AI processor test and burn-in is now the company’s primary growth lever. Both wafer-level and package-level systems are seeing surging demand, with management citing “substantial forecasts” from hyperscaler and AI ASIC customers. The company’s Sonoma and Fox XP platforms are being positioned as essential for high-temp operating life (HTOL) and production reliability testing, with customers increasingly viewing Aehr as the “go-to” provider for next-gen AI device qualification.
2. Wafer-Level Burn-In Unlocks Cost and Yield Advantages
Wafer-level burn-in, a process that tests chips before they are packaged, is gaining traction for AI and memory customers seeking to reduce yield risk and cost. Management highlighted that moving burn-in upstream avoids scrapping expensive substrates and stacked memory, with the yield savings “dwarfing” the incremental cost of testing at this stage. Aehr’s proprietary wafer pack technology and automated aligners are unique in the market, giving the company a first-mover advantage as customers transition to this paradigm.
3. Diversification into Memory, Photonics, and Power Semis
Beyond AI, Aehr is actively expanding into flash memory, silicon photonics, gallium nitride (GaN), and hard disk drive semiconductors. Recent benchmarks with NAND flash leaders and production ramps with photonics customers are broadening the company’s addressable market. While silicon carbide for EVs has slowed, Aehr’s unique solutions for GaN and photonics are positioning it for future infrastructure and automotive electrification cycles.
4. Consumables and Installed Base Expansion
Consumables revenue (wafer packs, burn-in modules) is expected to rebound as new systems are installed and customers ramp production. The company’s installed base of over 100 systems across 20+ semiconductor companies creates a recurring revenue stream and stickiness, especially as customers move from qualification to full production burn-in.
5. Manufacturing Scalability and Customer-Driven Roadmaps
Aehr claims it can support capacities exceeding 20 systems per month for both package and wafer-level platforms if demand materializes. Management is in active dialogue with customers about multi-year roadmaps, including transitions from package to wafer-level burn-in as devices become more complex and integrated. This customer-needs-driven approach is keeping Aehr at the center of next-gen semiconductor reliability requirements.
Key Considerations
This quarter marks a structural pivot for Aehr, with AI and data infrastructure demand now the dominant force shaping bookings and strategic direction. Investors should monitor:
Key Considerations:
- AI Dominance in Bookings: The vast majority of new orders and forecasts are tied to AI processor customers, with legacy EV exposure shrinking rapidly.
- Wafer-Level Market Creation: Aehr is effectively creating a new market for wafer-level burn-in, with no major competitors at scale, giving it a first-mover advantage.
- Customer Roadmap Visibility: Detailed multi-quarter forecasts from hyperscalers and leading test labs provide unusually strong visibility into future demand.
- Margin Headwinds from Mix: Near-term gross margin pressure is likely to persist until higher-margin consumables and new system shipments ramp.
- R&D Investment Intensity: Elevated R&D spend is required to maintain leadership in AI, memory, and automation, but is a strategic necessity for long-term growth.
Risks
Execution risk remains high as Aehr must convert large AI customer forecasts into firm orders and timely deliveries, especially as wafer-level burn-in benchmarks take longer than planned due to customer learning curves. Margin recovery is not guaranteed if product mix remains unfavorable or if memory and photonics ramps are delayed. Competitive encroachment from larger ATE vendors or in-house solutions at major customers is a latent threat. Macroeconomic or semiconductor cycle volatility could also impact the timing of large infrastructure and AI investments.
Forward Outlook
For the second half of fiscal 2026, Aehr guided to:
- Total revenue between $25 million and $30 million
- Non-GAAP net loss per diluted share between negative $0.09 and negative $0.05
For full-year fiscal 2026, management reinstated guidance and expects:
- Bookings between $60 million and $80 million in the second half, setting up strong fiscal 2027 revenue growth
Management highlighted several factors that will shape results:
- Customer forecasts for AI processor test capacity are driving record bookings visibility
- Silicon carbide and EV-related demand remains soft, but photonics and memory ramps are expected to contribute in fiscal 2027
Takeaways
Aehr’s strategic pivot to AI and wafer-level burn-in is reshaping its business model and growth trajectory, with legacy EV headwinds receding and multi-year AI infrastructure cycles taking center stage.
- AI Burn-In Bookings Surge: Customer-driven forecasts and early Q3 orders are setting up a bookings inflection that could double or triple legacy run rates, with fiscal 2027 positioned for record growth.
- Margin and Execution Watch: Near-term margin pressure and execution on large, complex customer ramps remain key watchpoints as Aehr transitions from benchmarks to full-scale production.
- Future Growth Vectors: Investors should track progress in memory, photonics, and recurring consumables as Aehr broadens its portfolio and leverages its installed base for recurring revenue.
Conclusion
Aehr’s Q2 marked a turning point as AI-driven test and burn-in demand eclipses legacy EV exposure, with bookings visibility and customer engagement at all-time highs. Sustained execution on AI, memory, and photonics roadmaps will be critical to realizing the company’s multi-year growth potential and restoring margin strength.
Industry Read-Through
Aehr’s results and commentary provide a leading indicator for the broader semiconductor capital equipment sector, highlighting the explosive impact of AI infrastructure buildouts on test and reliability requirements. The shift from package to wafer-level burn-in is likely to become a new industry standard, with cost and yield pressures forcing adoption across leading-edge nodes. Memory and photonics markets are also set for increased test intensity as device complexity and power density rise. Competitors in ATE, wafer handling, and reliability testing should expect higher R&D and automation demand as customers prioritize uptime, throughput, and mission-critical reliability for next-gen AI and data center chips.