AEHR Should I Buy
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Aehr Test Systems (AEHR) is not a strong buy at the moment for a beginner investor with a long-term strategy. While the company has positive catalysts such as a significant order boosting confidence and a bullish technical setup, the recent financial performance shows declining revenue and gross margin, alongside insider selling activity. Analysts have mixed views, with a recent downgrade and reduced price target. Considering the investor's background and the current data, holding off on buying is recommended until more consistent financial growth or stronger signals emerge.
The technical indicators are moderately bullish. The MACD is positive and expanding, moving averages are bullish (SMA_5 > SMA_20 > SMA_200), and the RSI is neutral at 59.679. The stock is trading above its pivot point of 29.455, with resistance levels at 35.12 and 38.62, and support levels at 23.79 and 20.29.
The stock surged over 26% recently after securing a significant order for its Sonora systems from a leading hyperscale customer, boosting market confidence. Additionally, the company's proprietary technology positions it well for growth in AI processors and HPC devices, expanding its addressable market.
Insiders are selling, with a 252.27% increase in selling activity over the last month. Financials show a YoY revenue drop of 26.53% and a gross margin decline of 35.85%. Analysts have lowered price targets, and management has reduced guidance for the second half of the fiscal year.
In Q2 2026, revenue dropped by 26.53% YoY to $9.88M. However, net income improved significantly, increasing by 214.20% YoY to -$3.23M, and EPS improved by 266.67% to -$0.11. Gross margin declined sharply by 35.85% YoY to 25.75%.
Analysts have mixed views. Craig-Hallum recently lowered its price target to $21 from $24 and maintained a Hold rating due to reduced guidance. Lake Street initiated coverage with a Buy rating and a $29 price target, citing the company's unique positioning and growth potential in AI and HPC markets.
