FORM vs. AEHR: Which Semi Test Equipment Stock is a Better Buy?

The Case for FormFactor

FormFactor continues to benefit from rising semiconductor test intensity driven by AI infrastructure. Record demand for HBM4 probe cards, increasing CPU test complexity, networking chips, custom ASICs and the initial GPU production ramp are supporting sustained growth. Management also expects continued strength in Foundry & Logic in the third quarter, backed by broad-based demand across high-performance computing applications.

The company has established a strong position at the intersection of advanced packaging and AI. HBM accounted for roughly two-thirds of DRAM revenues in the second quarter of 2026, supported by its differentiated SmartMatrix technology. Meanwhile, Co-Packaged Optics (CPO) revenues are ramping much faster than expected, with FormFactor now expecting to exceed $20 million in CPO revenues before the end of the third quarter and significantly surpass that level for 2026. This positions FormFactor to benefit from the long-term transition toward silicon photonics.

FormFactor delivered record non-GAAP gross margins of 53.3% and expects another improvement in the third quarter of 2026. Operational initiatives, including better yields and shorter cycle times, are driving profitability, while the new Farmers Branch manufacturing facility is expected to add meaningful capacity and further improve gross margins once fully ramped. FORM remains committed to doubling revenue to $1.6 billion and more than doubling earnings by 2030.

However, FormFactor’s DRAM business remains subject to changing customer wafer-start allocations between HBM and DDR based on pricing dynamics. The company continues to face supply-chain constraints and uncertainties related to tariffs, export controls and broader geopolitical developments, which could affect demand and operating costs.

The Case for AEHR

Aehr is well positioned to benefit from rising demand for silicon carbide (SiC) power semiconductors used in electric vehicles, renewable energy and AI data-center power infrastructure. Apart from SiC, the company is expanding into AI-related applications, including burn-in and reliability testing for AI processors, silicon photonics and advanced memory, significantly broadening its addressable market.

Aehr believes burn-in is becoming a critical step for AI processors as chip complexity, power consumption and advanced packaging increase. AEHR is seeing accelerating demand for both wafer-level and package-level burn-in from AI accelerator, CPU, ASIC and networking customers. The company highlighted record bookings, a record backlog and expects fiscal 2027 revenues of $130-$150 million, representing 160-200% year-over-year growth, driven primarily by AI customers already in production.

Aehr is reducing its dependence on any single end market by adding customers across silicon photonics, AI accelerators, data-center networking, gallium nitride (GaN) devices and hard disk drive components. The company continues to secure design wins and production programs, creating multiple long-term growth drivers beyond its traditional SiC business.

Nearly 95% of AEHR’s fiscal 2026 revenue comes from non-EV silicon carbide markets. AI processors accounted for approximately 71% of annual revenues, while silicon photonics contributed another 20%. The company is also expanding into memory (HBM and NAND), GaN and silicon MOSFET testing, creating multiple long-term growth drivers.

AEHR’s Earnings Estimate Revision Goes North, FORM’s Steady

The Zacks Consensus Estimate for FORM’s 2026 earnings is pegged at $2.40 per share, unchanged over the past 30 days, indicating an 84.62% increase over 2025’s reported figure.

The consensus mark for AEHR’s fiscal 2027 earnings has jumped by 54 cents to 70 cents per share over the past 30 days. The company reported earnings of 3 cents per share in fiscal 2026.

Stock Price Performance and Valuation

FormFactor shares have returned 49.6% year to date, underperforming Aehr’s appreciation of 223.9%.

Price Performance: FORM vs. AEHR

Image Source: Zacks Investment Research

Valuation-wise, shares of both FormFactor and Aehr are overvalued. In terms of forward 12-month price/sales, Aehr shares are trading at 13.48X, higher than FORM’s 6.53X.

Both FormFactor and Aehr have a Value Score of F.

FORM and AEHR Valuation

Image Source: Zacks Investment Research

Conclusion

While FormFactor offers a larger, more diversified semiconductor test portfolio with strong exposure to probe cards and advanced packaging, Aehr appears better positioned for higher long-term growth. The increasing complexity and cost of AI processors, HBM memory, silicon photonics and advanced packaging are making burn-in a mission-critical process rather than an optional step. Aehr’s leadership in wafer-level and package-level burn-in, record bookings and expanding customer pipeline across AI, hyperscale data centers and next-generation memory provide greater leverage to these emerging trends. 

Aehr currently sports a Zacks Rank #1 (Strong Buy), which implies that the stock is a better buy compared with FormFactor, which currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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