How Mixed 2025 Results and AI Test Wins At Cohu (COHU) Have Changed Its Investment Story

• Cohu, Inc. reported past fourth-quarter 2025 results with sales rising to US$122.23 million from US$94.12 million a year earlier, while net loss widened slightly to US$22.49 million and full‑year 2025 sales increased to US$452.96 million alongside a deeper annual loss of US$74.27 million.
• Alongside these mixed results, management guided first‑quarter 2026 sales to about US$122 million and highlighted a sharp systems order rebound, growing high-bandwidth‑memory test exposure, and expected gross‑margin improvement driven by recurring revenue and new Eclipse and AI‑related design wins.
• We’ll now examine how Cohu’s stronger sales but larger‑than‑expected loss and focus on improving gross margins may reshape its investment narrative.

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Cohu Investment Narrative Recap

To own Cohu, you need to believe that its mix of systems and recurring test revenue can eventually support healthier margins despite current losses. The latest quarter reinforced that tension: sales grew, bookings and HBM exposure improved, but the loss was wider than expected. Management’s emphasis on gross margin recovery and recurring revenue keeps the main near term catalyst intact, while the biggest risk remains execution and customer concentration as orders ramp across a still choppy semiconductor cycle.

The most relevant update here is Cohu’s Q1 2026 sales guidance of about US$122 million, roughly flat with Q4. That suggests the strong order rebound and design wins discussed on the call may take time to show up in reported revenue, which matters if you see the high bandwidth memory and Eclipse handler ramps as key drivers for the story. Yet investors should also weigh how concentrated some of those new wins appear to be with a few large customers.

But while orders are improving, investors should be aware that Cohu’s growing dependence on a handful of major customers...

Read the full narrative on Cohu (it's free!)

Cohu's narrative projects $640.1 million revenue and $90.3 million earnings by 2028. This requires 17.6% yearly revenue growth and a $177.4 million earnings increase from -$87.1 million today.

Uncover how Cohu's forecasts yield a $30.60 fair value, in line with its current price.

Exploring Other Perspectives

One member of the Simply Wall St Community currently pegs Cohu’s fair value at US$30.60, highlighting how individual investor views can be tightly clustered. You may want to weigh that against Cohu’s uneven path to profitability and the risk that concentrated customer exposure could amplify earnings volatility over time, then compare several alternative viewpoints before forming your own view.

Explore another fair value estimate on Cohu - why the stock might be worth just $30.60!

Build Your Own Cohu Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Cohu research is our analysis highlighting 1 key reward that could impact your investment decision.
• Our free Cohu research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Cohu's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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