Three Chip Equipment Stocks Benefiting from the AI Memory Boom
Even as semiconductor stocks face a sell-off, these chip equipment firms are riding the AI memory boom in chip equipment.
Key Takeaways
Aehr, Cohu and Onto Innovation are key beneficiaries of a memory-driven boom in chip equipment spending.
Aehr’s fiscal Q4 results beat expectations, with record bookings and backlog pointing to 160-200% revenue growth in fiscal 2027.
Bulls see the recent pullback as a temporary reset, while bears warn cheaper AI models could eventually curb chip equipment demand.
It has been a brutal past few weeks for semiconductor and memory stocks, which have been falling amid concerns about lofty artificial intelligence (AI) valuations and whether the market has got ahead of itself. This has led many investors to trim their positions, especially their exposure to leveraged funds.
Despite the AI trade being under pressure, the AI investment cycle is not over. According to research by SEMI published in June, global spending on 300mm wafer fabrication equipment for the memory sector is set to exceed $50bn this year, growing 29% from 2025’s level. Investment is expected to grow a further 11% to approximately $57bn in 2027.[1]
“As AI infrastructure expands, memory manufacturers are accelerating investments in both capacity and technology migration to support the next wave of data-intensive applications,” said SEMI President and CEO Ajit Manocha.
We take a look at three chip equipment specialists that are key beneficiaries of the memory boom: Aehr Test Systems [AEHR], Cohu [COHU] and Onto Innovation [ONTO].
Why AEHR, COHU and ONTO are key to chip testing
Aehr is a provider of ‘test and burn-in’ solutions for semiconductors used in AI, silicon photonic and data centre applications. Standard and ‘burn-in’ tests are used for quality assurance and stress-testing processes.
On 9 July, the company announced it had secured a follow-on production order from its leading silicon photonics customer. The order includes being able to test nine 300mm wafers at the same time.[2]
Onto provides process solutions for the semiconductor value chain, including equipment needed for wafer inspection and metrology, which ensures that chips are the right size.
Back in April, the company invested $710m in Japanese X-ray technology firm Rigaku [RGAKF] for a 27% stake. The partnership will combine Onto’s AI-focused metrology software with Rigaku’s metrology platform.[3]
Cohu supplies equipment and services for optimising chip manufacturing yield and productivity.
In May, the company announced a leading semiconductor manufacturer had placed several orders totalling approximately $5m for its Diamondx platform. The customer will use the platform to develop gallium nitride power devices for AI data centres.[4]
A bumpy ride for AEHR, COHU and ONTO
The Cohu share price has fallen 8.87% in the week to 17 July and 21.79% in the previous month. Nevertheless, COHU has gained 119.98% since the start of the year.
The Onto share price is down 12.94% in the week to 17 July and 12.25% in the past month. Despite this, ONTO is up 77.28% since 1 January.
Aehr has been something of an outlier. Fiscal Q4 earnings reported on 14 July lifted the share price 11.64% last week, albeit it is down 28.03% in the past month. AEHR has surged 301.44% year-to-date.
Aehr’s earnings show continued strong demand for chip equipment
Aehr comfortably surpassed analyst expectations for its fiscal Q4. Earnings were $0.11 per share compared with a consensus that the company would be reporting a loss of $0.01 per share; revenue came in at $18.8m versus expectations of $17.9m. The company ended the quarter with record quarterly bookings of $60.7m. Its backlog stood at $80.6m at the end of the three months to 29 May; this had risen to $100.6m at the time the earnings were reported.[5]
“Record quarterly bookings, a very strong backlog and growing demand across AI processors, silicon photonics and power semiconductors for our wafer-level and package-level burn-in solutions position us well for significant growth moving forward,” noted Aehr CEO Gayn Erickson in the earnings release.[6]
He added that the backlog had given the company “substantial visibility” into customer demand and fiscal 2027 revenue, which is expected to be in the $130m-150m range, which would represent 160-200% growth from 2026.
Cohu is set to report Q2 2026 earnings on 30 July, while Onto is set to deliver its Q2 2026 results on 6 August.
Here is how the current fundamentals of AEHR, COHU and ONTO compare.
AEHR, COHU and ONTO could be considered overvalued based on their forward P/E ratios. While revenue growth for all three is expected to slow in the next fiscal year, the outlook could change depending on AI momentum. Potential future bookings could justify paying a premium for the stocks.
The investment case for chip equipment stocks
Chip equipment stocks: The bull case
While the chip sector has come under heavy selling pressure, there is reason to be optimistic.
BofA analyst Vivek Arya wrote in a note to clients seen by MarketWatch in early July that what investors are seeing is more “a summer reset, not a fundamental reversal”. He is still bullish on chip equipment stocks and sees the wafer fab equipment market hitting $190bn in revenue in 2027, then $250bn in 2028.[7]
Chip equipment stocks: The bear case
The risk for the chip equipment stocks in the near term is that they could continue to be dragged down by concerns about the AI trade.
In the longer term, chip equipment manufacturers in the US could potentially be impacted by cheaper, more efficient AI models, like Kimi K3, which was unveiled by Beijing-based Moonshot AI on 17 July.[8]
If China’s AI models can take market share from the likes of Anthropic and OpenAI –Bloomberg reported over the weekend that Moonshot AI could IPO within the next six months[9] – then some US hyperscalers may reduce their infrastructure spending. This could lead to lower demand for chip equipment.
Conclusion
The semiconductor and memory sell-off could continue in the coming weeks, but the AI cycle is not over yet. AEHR, COHU and ONTO are three stocks that could benefit from continued spending on chip equipment and testing.
This is for informational purposes only. CMC Markets UK Plc does not recommend any specific securities or investment strategies. Investing involves risk and investments may lose value, including the loss of principal. Past performance does not guarantee future results.
[1] https://www.semi.org/en/semi-press-release/semi-projects-300mm-memory-equipment-investment-to-surpass-50-billion-dollars-in-2026
[2] https://www.aehr.com/2026/07/aehr-receives-follow-on-production-order-from-lead-silicon-photonics-customer-for-fully-automated-fox-xp-wafer-level-burn-in-system/
[3] https://investors.ontoinnovation.com/news/news-details/2026/Onto-Innovation-Announces-Strategic-Partnership-With-Leading-X-Ray-Provider-Rigaku-To-Advance-Next-Generation-Process-Control-Solutions/default.aspx
[4] https://cohu.gcs-web.com/news-releases/news-release-details/cohu-receives-multiple-orders-testing-next-generation-gan-power
[5] https://www.proactiveinvestors.com/companies/news/1095507/aehr-test-systems-surge-on-earnings-beat-strong-guidance-1095507.html
[6] https://www.aehr.com/2026/07/aehr-test-systems-reports-fiscal-2026-fourth-quarter-and-full-year-financial-results-with-record-quarterly-bookings-and-100-million-effective-backlog/
[7] https://www.marketwatch.com/story/chip-stocks-enter-bear-market-territory-a-bofa-analyst-says-not-to-panic-4d34df17
[8] https://www.reuters.com/world/china/chinas-moonshot-unveils-worlds-largest-open-ai-model-closing-us-rivals-2026-07-17/
[9] https://www.bloomberg.com/news/articles/2026-07-19/china-s-moonshot-plans-ipo-in-six-months-after-ai-breakthrough