Aehr Test Systems (NASDAQ:AEHR) experienced a significant premarket rally on Wednesday, with shares climbing 29.6% to $93.30. The surge followed the company's announcement of its fiscal 2027 revenue guidance, which ranges between $130 million and $150 million. This projection represents a 2.6 to 3 times increase over the previous year's results, driven by a robust effective backlog of $100.6 million.
The effective backlog, which includes orders placed after May 29, covers approximately 72% of the $140 million midpoint of the revenue guidance. This substantial visibility into future revenue has bolstered investor confidence, reducing reliance on speculative future deals. The company highlighted that demand from existing production programs continues to play a key role in its outlook.
Order Intake Outpacing Sales
Aehr's order intake has outpaced sales for the second consecutive quarter. In the fiscal fourth quarter, bookings reached $60.7 million against revenue of $18.8 million, resulting in a book-to-bill ratio of 3.2. This follows a Q3 ratio above 3.5, indicating strong demand momentum. For the fiscal second half, bookings totaled $97.9 million, exceeding the upper end of the company's previous $80 million projection by 22%.
The effective backlog nearly doubled from $50.9 million in the prior period, providing a clearer signal of demand than the fourth-quarter earnings beat alone. CEO Gayn Erickson noted that the backlog offers "substantial visibility" and attributed the strength to "multiple customers entering or expanding production."
AI and Silicon Photonics Driving Growth
Aehr specializes in burn-in equipment that stresses chips before shipment to identify early failures. Management expects AI-related revenue to account for approximately 70% of fiscal 2027 sales, with silicon photonics contributing 15% to 20%. Power semiconductors and other segments will make up the remainder. Notably, the company does not anticipate any memory revenue, even at the high end of its guidance.
The company's largest AI customer is adding wafer-level capacity, and a major processor supplier has expressed interest in pilot production validation after benchmark testing. Most of the forecast relies on products where Aehr already has production agreements or ongoing customer work.
Valuation and Risks
At the premarket price of $93.30 and with 32.48 million shares outstanding, Aehr's market capitalization stands at approximately $3.03 billion, or about 21.6 times the midpoint of sales guidance. Even in the high-end scenario, the stock trades at roughly 92 times forecast pretax non-GAAP earnings, reflecting high growth expectations.
However, the backlog does not guarantee revenue. In the fourth quarter, three customers each accounted for more than 10% of sales. The forecast also depends on future demand that has yet to be booked. Delays from large customers or unfavorable product mix could impact sales or margins.
Balance Sheet Improvement
Aehr's balance sheet has strengthened, though largely through equity financing. The company ended May with $116.5 million in cash and equivalents, including restricted cash, after raising $97.4 million net from public stock sales. Operations consumed $3.3 million in cash so far in fiscal 2026, and shares outstanding increased 8.7% year over year.
Fourth-quarter unaudited results showed a non-GAAP gross margin of 44.7%, up from 34.7% a year earlier. Adjusted net income reached $3.6 million, or $0.11 per share. Management described fiscal second-quarter revenue as "very strong" and noted that most of a $41 million April order will ship during that period, marking a key test for the backlog supporting the current valuation.
