Cohu (COHU) Stock Forecast & Price Target

Cohu is benefiting from a sharper HPC-driven growth profile, with systems orders up 62% Q/Q and the HPC opportunity raised to $80-100M in CY26, supported by Eclipse handlers, Neon HBM inspections, and 12 active HPC customers. It also has a more resilient revenue mix, as recurring revenue reached $76M, or 60% of March '26 quarter sales, while 1Q26 revenue of $125.1M and non-GAAP gross margin of 46.5% both exceeded guidance, signaling improving execution. Sequential utilization improvement to about 78%, expanding inspection demand, and a low ~1.3% software attach rate suggest additional upside from cross-selling and higher-margin recurring sales as compute and industrial demand recover.

Cohu is facing a cautious fundamental backdrop because Semi Systems sales were flat sequentially at $49M in the March '26 quarter despite 37% Y/Y growth, suggesting demand is uneven and reliant on a few follow-on orders rather than broad-based momentum. Management also indicated that post-acquisition synergies have largely been realized, so incremental earnings growth is more exposed to revenue stagnation or decline, while slow recovery in customer test utilization and weak auto/industrial end markets could leave the systems segment underperforming. Although 2Q26 guidance calls for $144.0MM in revenue, up 15% QoQ, and about $10M of the $19M sequential increase is HPC-related, gross margins are expected to ease to 44.0%, and debt levels plus possible operating loss add further downside risk.