Shares of ACM Research Inc. (ACMR) plummeted 9.51% in pre-market trading on Wednesday, despite the company reporting better-than-expected third-quarter revenue. The significant drop highlights investors' concerns over declining margins and a cautious outlook.

ACM Research, a supplier of wafer processing solutions for semiconductor and advanced wafer-level packaging applications, announced third-quarter revenue of $269.16 million, surpassing the IBES estimate of $251.7 million. However, the company's gross margin contracted to 42% from 51.4% in the same period last year, signaling potential pricing pressures or increased costs.

While net income rose to $35.889 million from $30.9 million a year earlier, the sharp decline in gross margin appears to have overshadowed the revenue growth. Additionally, ACM Research narrowed its full-year 2025 revenue guidance to a range of $875 million to $925 million, which may have been viewed as conservative by some investors given the strong Q3 performance. The combination of margin compression and a potentially cautious outlook seems to have triggered the sell-off, as traders reassess the company's growth trajectory and profitability prospects in a challenging semiconductor market.