Memory Lane.
I am feeling a little generous today.
In fact, I am afire with the need to tell you a story, one of “innocent-ignorance” dating back to 2021.
I have casually mentioned on different occasions that when I first started getting interested in US stocks, it was right smack at when SPACs came into prominence.
It was a time when the US stock market was on unsustainable high, almost on a daily basis, where a company’s fundamentals took a back seat and was a secondary concern.
It was also a time where Youtube gurus were all the rage and each of them were pushing out minimally two or more videos on US stocks.
I followed a handful of them and Cathie Woods was featured in heavy rotation by one of the Fin Tubers.
On 15 Jan 2021, I invested in $Cohu(COHU)$ because it was deemed ‘good’ investment.
COHU - What’s it all about?
The Business.
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COHU, is a heavyweight, foundational veteran pillar in the "back-end" of semiconductor manufacturing.
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It specialty lies in mission-critical equipment that ensures chips actually work before they reach consumer devices, data centers, or automotive systems.
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Founded in 1947 and headquartered in Poway, California, COHU has evolved from a hardware vendor into a vertically integrated powerhouse with a massive installed base of over 24,000 systems worldwide.
One-Stop Specialty Shop.
COHU’s total solution approach, provide 3 essential pillars when it comes to back-end testing:
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Test Handler: Robotic systems that physically move chips and regulate their temperature during testing.
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Semiconductor Tester: The "brains" (ATE - Automated Test Equipment) that electrically probe the chips.
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Interface Solutions: High precision “contractors” (sockets) act as the physical bridge between the chip and the tester.
With that, COHU has a cemented portfolio that covers everything from test contactors and probe pins to advanced data analytics software.
Headwind - No one saw.
Who would have thought that a company with a solid foundation could also suffer a fate far worse than bankruptcy - dwindling performance. (see below)
The chart illustrates a turbulent 5+ year period for COHU, from 15 Jan 2021 (day I invested in it) to the last trading day of April 2026. (see above)
For nearly 4 years, it underperformed the broader market before staging a recovery in mid-2025. (see above)
All the while, the $S&P 500(.SPX)$ maintained an overall upward trajectory with a +91.31% gain over the same period. (see above)
COHU’s stock price movement is really a story of two very different markets colliding:
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A cyclical semiconductor test-equipment company that spent most of 2021 - 2025 under pressure.
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Then the same company, finally caught a more favorable mix shift in late 2025 - early 2026 as AI and high-performance computing demand improved.
(1) Cyclical Correction Cycle.
Weak performance began with market’s post-pandemic rotation away from richly valued hardware names and into a tougher semiconductor capital-spending environment.
With COHU’s business tied to test & inspection of equipment, that means orders can be irregular and the stock starting to lose altitude after peaking in early 2021 at $50.55 (12 Feb 2021), fueled by global chip shortage and a surge in semiconductor capital expenditure.
When the industry moved into a massive inventory correction phase where customers delayed equipment purchases, worked through inventory, and tightened capex budgets, COHU's annual revenue began on a steady decline.
It fell from $887 million in 2021 to $402 million by 2024, even as broader markets stayed stronger.
COHU’s performance continued to be hampered by sharp contraction in the automotive & industrial sectors, COHU's core markets.
By 2023 and 2024, COHU was reporting substantial net losses, including a -$74.3 million loss for fiscal 2025, as revenue growth failed to keep pace with operational costs.
This continued into 2025 as investors favoured "front-end" fabrication companies or high-growth AI software, leaving "back-end" testing specialists COHU out of favour.
It culminated in a "capitulation" low in early 2025, when it bottomed out near $13.33 on 8 Apr 2025.
(2) The Inflection Point.
The upward trajectory beginning in mid-2025, marked one of the most aggressive turnarounds in COHU's recent history.
Its shares surged approx. +179% over the subsequent 12 months.
The primary driver was COHU's successful pivot into:
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High-Performance Computing (HPC) and
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Artificial Intelligence (AI).
Specifically, COHU's AI foray in “Neon for High-Bandwidth Memory” (HBM) initiative began generating significant revenue, with sales projected to reach $18 million in 2026, that will be a +65% YoY increase.
Also, market fundamentals greatly improved in H2 2025.
“Test cell utilization”, a key industry health metric rose from low 60s to 78% by the end of Q1 2026.
Between Q4 2025 & Q1 2026, COHU reported a +57% YoY increase in systems orders.
This signals that the years-long equipment replacement cycle had finally restarted.
Tell-tale signs first appeared in Q2 2025, when COHU reported the followings:
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Revenue: came in at $107.7 million, up +11% QoQ and +2.9% YoY.
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Gross margin: was a turnaround 43.7%.
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Recurring revenue: accounted for 63% of Q2 2025 total revenue, showing that the company’s lower-volatility business was still doing the heavy lifting while the systems cycle recovered.
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Net income (Non-GAAP) : was a ‘surprise’ $0.7 million, a return towards profitability.
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Earnings per share (Non GAAP) : was an improved $0.02, above zero level.
By the time Q1 2026 reporting came around, things have become clearer:
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COHU’s AI-driven compute addressable market estimate had risen to about $750 million.
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The company raised its FY 2026’s HPC revenue outlook to between $80 million - $100 million.
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It is a big deal for a company of this size because it provides investors a more focused growth lane than the broad, cyclical semiconductor market.
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Management also confirmed the “test-cell utilization” was about 78% at the end of March 2026, that suggests the recovery was not just about one-off orders but about better industry loading.
Q1 2026 quarterly earnings:
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Revenue: came in at $125.1 million, up +2.0% QoQ and +29% YoY.
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Gross margin: was 46.3% (GAAP); 46.5% (non-GAAP)
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Recurring revenue: was approx. 60% of total revenue.
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Net income (Non GAAP): was $0.6 million, still profitable.
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Earnings per share (Non GAAP): $0.01 above the zero level.
Additionally, the company also announced a 2nd multi-unit order for its Eclipse platform to support next-generation AI datacenter processors, further sign that the niche company is more than a cyclical rebound play.
Price Target - Revised.
With optimism returning, the financial institutions were quick to push out new & revised price target (PT) for COHU :
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01 May 2026 - TD Cowen revised PT to $60 and a “Buy” rating.
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01 May 2026 - $Jefferies Financial Group Inc.(JEF)$ revised PT to $55 - $60, with a “Buy”
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01 May 2026 - Needham revised PT to $54 and a “Buy” rating.
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28 Apr 2026 - Evercore ISI revised PT to $53 and a “Outperform” rating.
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20 Apr 2026 - B. Reiley revised PT to $50 with a “Buy” rating.
Technical Analysis.
As of 01 May 2026
Is COHU really a buy now, will it lose momentum half way ?
Again, I defer to its technical analysis for a “mathematical” confirmation.
Simple Moving Average (SMA).
On Fri, 01 May 2026, COHU ended the week at $45.59 /share. (see above)
It is above its SMA of 20-day ($31.31), 50-day ($24.92) and 200-day ($29.11).
With all 3 SMAs below the stock price, it is a classic indicator of a strong uptrend, in both immediate and long term.
If COHU is able to maintain the uptrend momentum with a “golden cross” formation, it could rise further. Can be seen from above chart that the 50-day SMA has turned up sharply, trying to cross the 200-day SMA from below.
MACD.
This is a very high positive value, meaning
The short-term MACD line (5.04) is above the long term Signal line (3.26), signaling a strong, established upward trajectory.
Both MACD line and Signal line (3.26) are also above the Zero line.
COHU’s high positive divergence (1.77) means the upward momentum is accelerating rather than tapering off.
Overall, the readings align with the stock’s accelerating positive momentum and rising price.
RSI.
COHU’s 14-day RSI at 85.05 implies that the stock is extremely overbought.
The high RSI suggests that buying pressure has exceeded sustainable levels, meaning a downward price correction or period of consolidation may be imminent.
My viewpoints: (mine only)
I am still weighing whether to make a full exit or wait a little longer to see if COHU will have its “golden cross” moment; just as it experienced the “death cross” on 28 Jun 2024.
While I ponder, my 4 years journey with COHU serves as a profound reminder that even the most technically sound company, one with decades of heritage and a "one-stop-shop" moat, is not immune to the gravity of market cycles.
A solid foundation serve as the floor, not the ceiling and ensures a company’s survival. It is market demand that dictates its prosperity.
For years, COHU lingered in limbo state, proving that a great company can be a poor investment when the underlying industry appetite is in retreat.
True wealth creation requires aligning those strengths with the precise timing of industrial demand and market appetite.
In the end, a rewarding investment is less about owning a "good" company and more about (a) mastering the intersection of business inflection points and (b) disciplined market entry. Agree?
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Do you think COHU will see the light of a “golden cross” moment soon ?
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Do you think I should hold onto COHU a little longer for a better profit ?
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