What happened

While the Nasdaq was up strongly on Friday, semiconductor equipment maker Aehr Test Systems (AEHR 2.82%) was falling hard in the opposite direction, down 17% as of 1:39 p.m. ET.

Aehr Test makes burn-in equipment that helps turn silicon into silicon carbide (SiC), as well as machines that produce gallium nitride (GaN). These are key materials in chips for electric vehicles, the modern energy grid, and advanced communications. Therefore, Aehr has seen a surge in orders over the past year, and the stock had rallied in a big way quarter to date.

Despite reporting solid earnings last night that beat analyst expectations, investors appear to be taking profits in this stock, which is still up 58% year to date, even factoring in today's sell-off. And today's announcement of the CFO's retirement probably isn't helping either.

So what

In its fiscal third quarter ending Feb. 28, Aehr logged 12.6% revenue growth and adjusted non-GAAP (generally accepted accounting principles) earnings per share of $0.16. Both revenue and profits actually beat analyst expectations, but perhaps even more encouraging was the company's bookings figure, which came in at $33.3 million -- double the quarterly revenue figure.

So, why the drop today? There could be a couple of reasons. First, the company followed last night's earnings release with a filing this morning, disclosing that the company's CFO Kenneth Spink will be retiring after this fiscal year ending in May. Investors tend to view retirements or resignations of key executives negatively. Sometimes these departures are a big deal, but sometimes not.

In addition, the company's revenue growth, while ahead of analysts' quarterly expectations, did show a pretty marked deceleration from earlier periods. The 12.6% growth figure compares with 54%, 89%, and 166% year-over-year growth in the three prior quarters.

With Aehr's stock having run so far and the company trading at a 71 P/E ratio, it's perhaps no wonder that the stock is giving back some year-to-date gains. It's also the last day of the first quarter, so active money managers may be logging some end-of-quarter profits as well.

Now what

Both SiC and GaN should be high-growth markets going forward, so that definitely bodes well for Aehr's future prospects. The problem is that the market appears to be very aware of this, and has assigned Aehr a premium multiple.

A high-growth stock like this may be prone to volatility, both on the way up and the way down. Therefore, at the risk of missing out on future gains, I'd be more interested in Aehr at a lower multiple. Today's end-of-quarter dip may provide an interesting opportunity, but with so many semiconductor stocks trading at bargain multiples these days, it's difficult to chase Aehr here, even with today's 17% discount. Nevertheless, given the bright prospects for the electrification of autos and energy grid this decade, it's a name to follow and keep on your watch list.