News

Key Points

• The identity of that client was not disclosed.

• However, Aehr revealed that it is a business that supplies AI chips to data centers.

A new order from a customer deeply involved in artificial intelligence (AI) was the key development convincing investors to flock to Aehr Test Systems (NASDAQ: AEHR) on Monday. With that rally on an otherwise cautious day for the stock market, Aehr's stock flew nearly 18% higher as a result.

14 million reasons to buy

Aehr announced the new contract before market open. One of its customers has drafted it to supply equipment for the manufacture and testing of AI chips. The order is worth $14 million, and Aehr said the products are slated to ship within the next six months.

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Due to non-disclosure agreements (NDAs) the company has in place with clients, it did not name the counterparty. It did describe it as its "lead AI processor customer," and a company in the business of building and supplying AI chips in large data centers.

In the press release touting the new arrangement, Aehr hyped the value of its testing hardware. "As power densities, current levels, and device complexity continue to rise, early life failure screening at the wafer level has become critical to maximizing yield, improving system reliability, and lowering the total cost of ownership for data center operators," the company wrote.

A sideways pick

That's a fine, and nearly indisputable, selling point for Aehr's wares. This company looks like an excellent pick-and-shovel play on the AI revolution, particularly given that some of the stocks most closely associated with AI hardware are awfully popular (read: expensive) these days, despite some investor pullback.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.