Why Cohu Stock Is Sinking Today

Cohu reported Q4 revenue of $122.2 million, roughly +30% year‑over‑year and in line with analyst expectations, but posted a non‑GAAP adjusted loss of $0.15 per share versus the Street’s modeled $0.06 per‑share profit, sending the stock down about 7.2% intraday. Management guided Q1 sales of $115 million to $129 million (roughly flat sequentially) and forecast gross margin around 45% versus 42.7% a year ago, and pegged full‑year high‑bandwidth‑memory (HBM) revenue at $15–$20 million, noting HBM growth could help margins going forward.

Analysis

Market structure: COHU’s 30% revenue growth with an adjusted loss signals strong end-market demand but adverse mix/costs; winners are AI chipmakers and HBM suppliers (NVDA, HBM foundries) if HBM adoption rises, losers are small ATE/test-equipment names with tight cash flow. Pricing power is weak for COHU until gross margin stabilizes above ~45%; incremental HBM sales ($15–20M guidance) could shift mix but is <20% of a quarter’s revenue, so limited immediate share gains.

Risk assessment: Near-term (days–weeks) expect volatility and IV elevation; short-term (1–3 quarters) risk centers on continued margin misses and inventory build in customers; long-term (≥12 months) upside hinges on sustained HBM ramps tied to NVDA-led AI capex. Tail risks: sudden loss of a top-3 customer, supply-chain disruption, or a contract win that materially exceeds $20M (positive). Key hidden dependency: COHU’s profitability is levered to HBM unit economics and customers’ fab timelines.

Trade implications: Direct play — short COHU size-managed (2–3% NAV) or buy a 3-month 10%/20% OTM put spread to limit downside; pair trade — long NVDA (1–2% NAV) vs short COHU (1% NAV) to express AI demand over niche test equipment. Rotate 2–4% away from small-cap semiconductor equipment into large-cap AI/semiconductor leaders (NVDA, SOXX), and use a 25–40% downside target on COHU with a hard stop at +15% loss.

Contrarian angles: The selloff may be overdone if management hits guidance: margin improvement to ≥45% next quarter and HBM >$20M could trigger a rapid re-rating, so keep positions size-limited and use spreads. Historical precedent: ATE suppliers have gapped down on misses then rebounded on order reacceleration; thus watch the next 60-day order/intake signal and avoid outright conviction until one positive or negative quarter confirms the trend.

Key Decisions for Investors

• Establish a 2–3% NAV short position in COHU (ticker COHU) with a target P/L of +25–40% within 1–3 months; add on a further 5–10% price weakness, and cut the short if COHU reports adjusted EPS ≥ $0.05 or gross margin >44.5% next quarter.
• Buy a 3-month COHU put spread to limit tail risk: purchase 10% OTM puts and sell 20% OTM puts (net debit <=0.5% NAV), close into earnings or if IV compresses >30% from today’s level.
• Initiate a relative-value pair: long NVDA 1–2% NAV vs short COHU 1% NAV for a 3–6 month hold to express AI/HBM upside; unwind the pair if NVDA underperforms semiconductor index by >5% in 2 weeks or if COHU reports HBM sales >$20M and margin ≥45%.
• Reduce small-cap semiconductor equipment exposure by 2–4% of portfolio and redeploy into NVDA/SOXX-sized positions to favor durable margin leaders; reassess after next 60 days of capex/order data or COHU’s next quarterly release.