Sep 09 2026 02:02 AM EST

Cohu Rises as AI Test Equipment Orders and Upbeat Guidance Drive Market Reassessment

Shares of Cohu, Inc. (NASDAQ: COHU) have advanced nearly 15% over the past five days, following a robust second-quarter earnings beat, upward revisions to full-year guidance, and continued order momentum for AI and high-performance computing test equipment. The stock’s move reflects renewed investor confidence in Cohu’s growth prospects amid expanding recurring revenue streams and sector tailwinds, though margin pressure and cyclical risks remain relevant.

Earnings Beat and Guidance Revision Anchor Market Response

Cohu reported second-quarter revenue of $149 million, up 38% from a year earlier and ahead of the guidance midpoint. Non-GAAP earnings per share were $0.26, beating consensus estimates by 87%. Gross margin improved to 45.5%, reflecting a favorable product mix and recurring revenue expansion. Adjusted EBITDA margin reached 12%.

Management raised its full-year revenue growth outlook to approximately 35% year-on-year, and increased its high-performance computing (HPC) segment guidance to $100–$110 million, up from the previous $80–$100 million. Third-quarter revenue is forecast at $170 million ± $7 million, implying sequential growth of 14% and annual growth of 35%.

AI-Driven Equipment Orders and Recurring Revenue Momentum

The immediate catalyst for the share-price move was a surge in orders for Cohu’s Eclipse platform and next-generation GaN power device testers, targeting AI data center applications. Computing represented 46% of system orders in the quarter, up 150% year-on-year. The company’s recurring revenue streams—consumables, software, and aftermarket services—comprised 53% of total sales in the quarter, signaling greater revenue resilience and margin stability.

Cohu’s HPC pipeline expanded to an addressable $850 million annually, with improved customer visibility and larger platform wins in thermal handling and analytics software. Major customer wins with U.S. and Korean chipmakers and OSATs strengthened the outlook for continued growth in AI and advanced computing test segments.

Sector Tailwinds and Analyst Upgrades

Cohu’s results and guidance coincided with broad sector momentum in semiconductor equipment, fueled by structural demand for AI, advanced packaging, and data center buildouts. The global market for semiconductor test equipment is projected to reach $21.6 billion by 2031, with Cohu positioned as a specialized provider in back-end testing and handling.

Analyst sentiment has turned more positive, with multiple upgrades following the Q2 report. Craig-Hallum, B. Riley, Needham, Stifel, and Jefferies raised price targets to $65–$74. The stock has outperformed sector indices and the S&P 500, rising 14.9% over five days and 146% in the past year.

Operational Expansion and Strategic Initiatives

Cohu is doubling manufacturing capacity in Malaysia by year-end and expanding thermal head production in the Philippines to support further HPC handler output increases into 2027. Recent acquisitions in analytics and strip-handling broadened the product portfolio and recurring revenue base.

The company’s R&D investments have driven new product launches in AI processors, HBM inspection, and analytics software. Software pilots are converting to production deployments, creating high-margin, multi-year contracts. Cohu is actively evaluating M&A opportunities in recurring revenue areas but remains disciplined amid elevated sector valuations.

Risks and Investor Considerations

The market’s reassessment has elevated expectations for execution and margin improvement. Higher input costs, notably in memory and integrated circuits, pose risks to gross margins and supply chain stability. Automotive segment recovery remains sluggish, with orders down 24% year-on-year, though industrial and consumer segments are improving.

Insider selling by executives and directors has increased, with sales by the CFO, SVP, and lead independent director, though institutional ownership remains above 50%. Valuation concerns have surfaced due to the rapid share appreciation, and consensus models suggest the stock could be overvalued by 18–88% depending on intrinsic value estimates.

Cohu’s latest results have prompted a market repricing, driven by AI-linked demand, recurring revenue gains, and improved guidance. The sustainability of these trends, execution on capacity expansion, and margin normalization will be critical to maintaining investor confidence amid sector and company-specific risks.