Cohu's Q1 2025 Results: Struggling Through a Semiconductor Slump, but Betting on the Future

Cohu, Inc. (NASDAQ: COHU), a leader in semiconductor test equipment and data analytics, reported its Q1 2025 earnings on May 1, 2025, highlighting a challenging quarter amid a sluggish semiconductor market. While revenue declined year-over-year, the company pointed to strategic moves—like its Tignis acquisition and breakthroughs in High Bandwidth Memory (HBM) inspection systems—as signs of long-term resilience. The results, however, fell short of analyst expectations, pushing the stock down 40% year-to-date. Is this a buying opportunity, or a sign of deeper structural issues? Let’s dive in.

The Numbers: A Mixed Quarter, but a Slump in Context

Cohu’s Q1 2025 revenue totaled $96.8 million, a 10% drop from $107.6 million in the same period last year. The miss was small—just 0.21% below consensus estimates—but it’s the second consecutive quarter of declining revenue. Net losses widened to $0.66 per share (GAAP basis), though non-GAAP losses narrowed to $0.02 per share, a slight improvement over Q1 2024.

The semiconductor industry has been in a prolonged slump, with demand for chips cooling as inventories pile up. Cohu, which relies heavily on semiconductor manufacturers for test equipment, isn’t immune. Yet, there are reasons to believe the company is positioning itself for a recovery.

Key Highlights: HBM, Recurring Revenue, and Tignis

• HBM Breakthrough: Cohu secured a multi-unit order for its HBM inspection systems, a market it entered late last year. HBM is critical for AI and high-performance computing, and this order signals Cohu’s ability to tap into emerging tech trends.
• Recurring Revenue Surge: Orders for test handlers, inspection systems, and interface products rose 28% quarter-over-quarter. This recurring revenue—less cyclical than new equipment sales—is a positive sign of underlying demand.
• Tignis Integration: The $40 million acquisition of Tignis, finalized in late 2024, is bearing fruit. Cohu is now showcasing its AI-driven data analytics software to new customers, a key step in turning Tignis into a revenue driver.

Management’s Optimism vs. Analyst Skepticism

CEO Luis Müller struck an optimistic tone, emphasizing design wins, recurring order growth, and expansion into AI-driven semiconductor manufacturing segments. “We’re seeing strong momentum in Silicon Carbide (SiC) burn-in test solutions and AI process monitoring,” he noted.

But analysts remain cautious. Zacks Investment Research assigned a “Sell” rating, citing unfavorable earnings revisions and the volatile semiconductor manufacturing industry. Their consensus forecast for 2025 calls for just $430.3 million in revenue and a razor-thin $0.02 per share profit.

The Outlook: Betting on a Q2 Rebound

Cohu guided Q2 revenue to a range of $106 million ±$7 million—a potential 10% sequential rebound from Q1. If achieved, this would signal stabilization. But with semiconductor demand still uncertain, execution risks remain.

The Investment Case: Value or Value Trap?

Cohu’s stock is down 40% year-to-date, trading at just 0.7x its 5-year average P/S ratio. The cash position of $200.8 million provides a buffer, and the $8.6 million spent on share repurchases shows confidence in the stock’s value.

Yet, the company is at a critical juncture. The HBM and Tignis bets are high-risk, high-reward. If Cohu can scale these new markets, it could emerge as a leader in AI-driven semiconductor solutions. But if the semiconductor downturn drags on, the company’s margins and cash reserves could come under pressure.

Conclusion: A Hold for Now, but Watch for Q2 Clarity

Cohu’s Q1 results are a snapshot of a company navigating choppy waters. While the top-line decline and net loss are concerning, the recurring revenue growth and strategic wins suggest a path forward.

Investors should focus on two key metrics:
1. Q2 Revenue: Does Cohu hit its $106 million guidance? A sequential rebound would be a positive signal.
2. Tignis Integration: When does the software start contributing meaningfully to margins?

At current prices, Cohu is a speculative hold. The stock’s beaten-down valuation offers some cushion, but the semiconductor recovery must materialize soon. If Q2 proves resilient, this could be a bottom. If not, the “Sell” rating from Zacks may look prescient.

In the end, Cohu’s future hinges on its ability to turn emerging tech bets into steady revenue streams. For now, the jury is out—but the data from Q2 will start to tell the story.