Cohu (COHU) Stock Forecast & Price Target

Cohu is benefiting from a rare combination of strong near-term execution and a credible multi-year AI/HPC growth runway, with 3Q26 revenue of $173.0 million and EPS of $0.43 both ahead of consensus, while gross margin of 45.7% and operating margin of 14.7% show improving profitability. Management’s 4Q26 guide to $178.0 million implies further sequential growth above normal seasonality, and its preliminary CY27 outlook for 30% to 40% revenue growth, supported by a roughly $1.0 billion AI HPC pipeline, suggests the business is shifting toward a higher-growth, higher-margin profile. Rising customer utilization to 82%, expanding Eclipse handler capacity, and a favorable mix shift toward Systems and recurring demand reinforce confidence that fundamentals are strengthening into 2027.

Cohu is facing a weaker fundamental backdrop as the continued auto, industrial, mobile, and compute correction is pressuring demand across its semiconductor test and inspection portfolio. Despite its leadership in test handlers and sockets and prior benefits from EV, ADAS, and 5G-driven test intensity, the company has been hampered by low test cell utilization and a prolonged inventory digestion period in these end markets. Even with margin pressures that hurt the stock through 2021 and a gross margin floor near 46%, the current cycle’s softness and uneven end-market recovery support a negative outlook.