Cohu: AI Test Exposure Can Still Pull Earnings Higher

I rate Cohu a buy, as its AI/HPC pipeline and recurring revenue base are underappreciated in current earnings. COHU's products address the increasing complexity of AI and high-performance computing chip testing, positioning it for significant revenue growth. Management targets $600–800M revenue, 48–50% gross margin, and $1.50–$3.25 non-GAAP EPS mid-term, with upside if the AI/HPC funnel converts. Key risks include delayed conversion of the $600–700M AI/HPC opportunity and margin headwinds from ongoing investments. My current view is a buy rating for Cohu (COHU). COHU now has a clearer way to benefit from AI and high-performance computing, and I believe the current earnings profile does not reflect this.