Aehr Test Systems (NASDAQ:AEHR) shares experienced a sharp rally in late trading on Tuesday, July 14, 2026, following the release of a robust quarterly earnings report and a strong forward outlook. The stock closed the regular session up 5.9% at $72.01, then jumped approximately 27% in after-hours trading to around $92. The surge was driven by record order bookings and a substantial backlog that provides significant visibility into the company's fiscal 2027 revenue target.
Record Orders and Backlog Growth
The chip-testing equipment maker reported fourth-quarter bookings of $60.7 million, with revenue of $18.835 million, resulting in a book-to-bill ratio of 3.2. Revenue climbed 33.7% year-over-year. The effective backlog, which includes firm orders and bookings taken after the quarter closed, stood at $100.6 million, up from $50.9 million in April. This order book now covers approximately 67% to 77% of Aehr's fiscal 2027 revenue guidance of $130 million to $150 million, without requiring any additional wins.
CEO Gayn Erickson highlighted that the backlog provides “substantial visibility” and noted that Aehr's main AI production customer is transitioning from system-level burn-in to all wafer-level burn-in. The company also completed benchmark testing for another major processor supplier and secured about $8 million in silicon-carbide orders, adding diversification in automotive and power-chip markets.
Margin Challenges and Profit Outlook
While the revenue outlook is strong, profitability remains a tougher metric. Aehr's adjusted net income for fiscal 2027 is projected at $23.4 million to $33.0 million, up from just $910,000 in fiscal 2026. This implies adjusted earnings growth of at least 25 times year-over-year. The fourth-quarter adjusted net margin came in at 18.9%, within the company's 18%-22% target range, but adjusted operating margin was only 5.1%, and adjusted pretax margin was 9.1%. The company benefited from a $1.846 million income-tax benefit, which accounted for about 52% of adjusted net income, making underlying profitability appear stronger than the operating pace.
Adjusted gross margin improved to 44.7% in the fourth quarter from 36.5% in the third, as scale begins to kick in. Sequential revenue jumped about 83%, while adjusted operating expenses rose only 18%, indicating that more sales are flowing through to the operating line.
Financial Metrics and Market Valuation
Aehr's cash position stood at $116.5 million, but $97.4 million of that came from public share sales. Operations burned $3.3 million in cash during the quarter, and shares outstanding increased 8.7% year-over-year, reflecting dilution. With a share count of 32.48 million as of May 29 and the stock near $92 in after-hours trading, Aehr's market capitalization is approximately $3 billion. This puts the price-to-sales multiple at around 20 to 23 times its projected fiscal 2027 revenue, a premium valuation that investors are betting on continued execution.
Key Risks and Investor Considerations
The risks for Aehr are direct: backlog depends on customer production schedules, and most of the forecast is tied to large customer ramps that have not been disclosed. The company must now deliver on its $100.6 million backlog as planned and grow operating profit to hit its adjusted net margin target of 18%-22% without relying on a large tax benefit. Execution timing is critical, and investors will be watching for evidence that the AI-driven demand translates into sustainable profitability.
Aehr's stock outperformed the PHLX Semiconductor Index's 2.54% gain in the regular session, and the after-hours surge suggests strong investor confidence in the company's growth trajectory. However, the margin math makes the path to profitability more challenging, and the market will be looking for continued operational improvements in coming quarters.
