Aehr Test Systems (AEHR -20.16%) stock tumbled 25.7% through 9:45 a.m. ET Tuesday despite beating on both top and bottom lines last night.
Heading into the semiconductor quality tester's fiscal Q1 2026 report, analysts expected no better than break-even earnings on sales of $10.8 million. Aehr delivered a surprise $0.01 profit, however, and outperformed on revenue with $11 million in sales.
Aehr stock sank anyway.

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What's the matter with Aehr?
Does this make any sense? Actually, it does.
While Aehr "beat" on both sales and earnings, the stock's $11 million in Q1 sales still represented a 16% slide in revenue year over year. As for the surprise "profit," moreover, it turns out it was only a non-GAAP (adjusted) profit. Earnings as calculated according to generally accepted accounting principles (GAAP) were actually negative $0.07 per share -- a reversal of last year's Q1 profit of $0.02 per share.
Moreover, Aehr said bookings in the quarter -- indicative of future revenue trends -- were only $11.4 million. That's a bit better than Q1 revenue this year, but shows demand for Aehr's services remains much weaker than it was a year ago.
Is Aehr stock a sell?
CEO Gayn Erickson did his best to put a bright face on the results, insisting "momentum in packaged part qualification and production burn-in for AI processors continued to drive growth." But the numbers tell a different story. Aehr didn't grow, but rather shrank, in Q1.
Erickson tried to hitch sentiment surrounding Aehr, too, to the frenzy in artificial intelligence stocks, arguing "the rapid advancement of generative AI and the accelerating electrification of transportation and global infrastructure represent two of the most significant macro-trends impacting the semiconductor industry today."
So far, though, Aehr doesn't seem to be capitalizing well on this trend.