Shares in Aehr Test Systems (AEHR -3.26%) slumped by 22.2% in the first half of 2025, according to data provided by S&P Global Market Intelligence. That figure may surprise investors, not least because it's a long, long way from telling the whole story of a stock that declined 56% in the first three months of 2025 only to rise 77.4% in the last three months of the half-year.

Aehr Test Systems' wild ride in 2025

The fall and rise of the stock mirrors the narrative around it and its end markets. The company recently reported its full-year financial 2025 earnings. For the sake of clarity, its financial year ends on May 30. Going back to focusing on the first six months of the calendar year, Aehr started the year with most investors thinking of it as a company focused on the silicon carbide (SiC) wafer-level burn-in (WLBI) market, and with good reason, because the SiC WLBI market accounted for 90% of its sales in its financial year 2024.

ON Semiconductor (ON 0.40%) has previously been named as a significant customer, and its sales slowdown has mirrored a broader slowdown in the SiC market, principally in the electric vehicle (EV) market. A combination of an ongoing relatively high interest rate and a correction from a previous boom in EV spending meant Aehr couldn't rely on the SiC WLBI market for growth in its financial 2025.

Indeed, CEO Gayn Erickson recently outlined that SiC WLBI "made up less than 40% of our revenue this fiscal '25." As such, the story of Aehr's first three months was disappointing, as its EV end market for SiC WLBI equipment continued to weaken.

Aehr Test Systems develops new markets

The significant turnaround in the stock's fortunes in 2025 occurred in the third-quarter earnings report in April, when management announced it was expanding into new markets and was on track to generate 35% of its revenue (later confirmed) from the artificial intelligence (AI) processor burn-in market. In addition, management said it had "four customers representing over 10% of revenue, and three of these are new markets," including WLBI of gallium nitride (GaN) semiconductor supply to the automotive market.

Image source: Getty Images.

Furthermore, on the fourth-quarter earnings release, Erickson said it had secured "a major hyperscaler" as a first production AI customer in the packaged part burn-in (PPBI) market.

While Aehr isn't naming these significant customers, a slide deck of its customers includes names like Microsoft, Alphabet's Google, Nvidia, ON Semiconductor, and Infineon, among many others.

Where next for Aehr Test Systems?

Management believes its AI end markets are potentially 3 to 5 times larger than its traditional SiC markets, and that optimism is fueling the current stock price strength.