Track market-moving stories before they get noisy

Reddit Inc. (RDDT - Free Report) closed the most recent trading day at $173.45, moving -5.69% from the previous trading session. This change lagged the S&P 500's 2.65% loss on the day. Meanwhile, the Dow lost 1.35%, and the Nasdaq, a tech-heavy index, lost 4.18%.

Shares of the company have appreciated by 12.17% over the course of the past month, outperforming the Computer and Technology sector's gain of 10.37%, and the S&P 500's gain of 5.47%.

The investment community will be paying close attention to the earnings performance of Reddit Inc. in its upcoming release. The company is expected to report EPS of $0.99, up 120% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $746.89 million, up 49.49% from the year-ago period.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $4.83 per share and revenue of $3.25 billion. These totals would mark changes of +84.35% and +47.64%, respectively, from last year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Reddit Inc. These revisions help to show the ever-changing nature of near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 1.05% higher. As of now, Reddit Inc. holds a Zacks Rank of #3 (Hold).

Looking at valuation, Reddit Inc. is presently trading at a Forward P/E ratio of 38.05. This indicates a premium in contrast to its industry's Forward P/E of 18.84.

The Internet - Software industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 82, finds itself in the top 34% echelons of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

“Buy Reddit very slowly, not aggressively,” he added.

Starwood Property Trust, Inc. (NYSE: STWD has not been a good stock, Cramer said.

UBS analyst Marissa Lobo, on June 2, upgraded Starwood Property Trust from Neutral to Buy and raised the price target from $19.5 to $20.

Cramer said Ralliant Corporation (NYSE:RAL) is a “good company, but it has gone parabolic.”

On the earnings front, Ralliant, on May 12, reported better-than-expected first-quarter financial results and raised its FY2026 adjusted EPS and FY2026 sales guidance above estimates.

When asked about Blue Owl Capital Corporation (NYSE:OBDC), he said, “I have not recommended anyone's business development company. I can't start doing it now.”

Blue Owl Capital, on May 6, posted weaker-than-expected results for the first quarter.

BorgWarner Inc (NYSE:BWA) has been an “absolute winner, but again it's another parabola stock,” Cramer noted.

Wells Fargo analyst Colin Langan, on June 2, maintained BorgWarner with an Overweight rating and raised the price target from $68 to $83.

Price Action Starwood Property Trust shares fell 0.2% to settle at $17.05 on Friday. Ralliant shares dipped 3.6% to close at $60.17. Borgwarner shares fell 5.7% to close at $72.63 on Friday. Blue Owl Capital shares slipped 2.5% to settle at $11.02. Reddit shares fell 5.7% to settle at $173.45. Photo via Shutterstock

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Reddit shares are powering higher. Why is RDDT stock up today? What Is Driving Reddit’s Stock Movement Today?The stock has been sensitive to rates after May's jobs report showed 172,000 payrolls added versus 80,000 expected, a surprise that pushed the 10-year yield above 4.5% and weighed on high-multiple growth valuations. Separately, Reddit was passed over for S&P 500 inclusion in the latest rebalance, disappointing investors who had been positioning for forced passive-fund buying.

Reddit is also holding its Annual General Meeting today, with investors listening for updates on user growth and the status of AI licensing renewals with Google (NASDAQ:GOOGL) and OpenAI.

Critical Price Levels To Watch For RDDTMomentum is improving: MACD is above its signal line and the histogram is positive, which typically signals that downside pressure is easing and buyers are gaining traction versus the prior downswing. In plain English, MACD compares two moving averages, and being above the signal line suggests momentum is shifting in favor of the bulls rather than accelerating lower.

From a level standpoint, bulls generally want to see price hold above nearby support and then work back toward the longer-term trend line overhead, especially after the recent swing low in March and swing high in June.

Key Resistance: $213.00 — a nearby round-number/pivot area where rebounds can stall Key Support: $178.00 — a nearby pivot zone close to current price where buyers previously stepped in What Is Reddit And How Does It Make Money?Reddit is a social media platform where users can engage in conversations, explore, and create communities centered around their interests. Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit has evolved into a vast network of user-generated content organized into specialized forums known as "subreddits."

Its community-driven model relies on volunteer moderators, and the business is primarily monetized through advertising plus data licensing agreements. That licensing angle is central to the current debate, because renewals tied to AI training data can move the revenue narrative quickly, while user growth trends still matter for the ad engine and overall sentiment.

Reddit’s Benzinga Edge Rankings ExplainedBelow is the Benzinga Edge scorecard for Reddit, highlighting its strengths and weaknesses compared to the broader market:

The Verdict: Reddit’s Benzinga Edge signal reveals a growth-led profile with only moderate momentum and a clear valuation headwind. For longer-term bulls, the setup tends to work best when price can reclaim the 200-day moving average and fundamentals keep validating that premium multiple.

RDDT Stock Price Activity UpdateRDDT Stock Price Activity: Reddit shares were up 4.14% at $178.21 at the time of publication on Tuesday, according to Benzinga Pro data.

Image: Shutterstock

Market News and Data brought to you by Benzinga APIs

© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

To add Benzinga News as your preferred source on Google, click here.

Reddit Inc. (RDDT - Free Report) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.

Over the past month, shares of this company have returned +11.7%, compared to the Zacks S&P 500 composite's -1.6% change. During this period, the Zacks Internet - Software industry, which Reddit Inc. falls in, has lost 1.1%. The key question now is: What could be the stock's future direction?

While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.

Revisions to Earnings EstimatesRather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

For the current quarter, Reddit Inc. is expected to post earnings of $0.99 per share, indicating a change of +120% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.8% over the last 30 days.

For the current fiscal year, the consensus earnings estimate of $4.83 points to a change of +84.4% from the prior year. Over the last 30 days, this estimate has changed +1.1%.

For the next fiscal year, the consensus earnings estimate of $6.39 indicates a change of +32.2% from what Reddit Inc. is expected to report a year ago. Over the past month, the estimate has changed +0.6%.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Reddit Inc..

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Projected Revenue GrowthEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.

For Reddit Inc., the consensus sales estimate for the current quarter of $746.89 million indicates a year-over-year change of +49.5%. For the current and next fiscal years, $3.25 billion and $4.31 billion estimates indicate +47.6% and +32.5% changes, respectively.

Last Reported Results and Surprise HistoryReddit Inc. reported revenues of $663.41 million in the last reported quarter, representing a year-over-year change of +69.1%. EPS of $1.01 for the same period compares with $0.13 a year ago.

Compared to the Zacks Consensus Estimate of $614.09 million, the reported revenues represent a surprise of +8.03%. The EPS surprise was +62.9%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.

ValuationWithout considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Reddit Inc. is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Reddit Inc.. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

Key Takeaways RDDT's international revenue surged 76% in Q1 2026, ahead of 67% U.S. revenue growth. RDDT's international DAUq rose 26% to 73.3M, while international ARPU climbed 51% to $2.02. RDDT expanded content to 30 languages and sees Q2 2026 revenues of $715M-$725M. Reddit (RDDT - Free Report) is benefiting from a robust international expansion strategy that is fueling both its financial performance and long-term growth prospects. In the first quarter of 2026, international revenues surged 76% year over year, outpacing the already strong 67% growth in U.S. revenues.

In the first quarter of 2026, International ARPU increased 51% year over year to $2.02, signaling improving monetization intensity across regions. The platform’s international daily active unique users grew 26% year over year to 73.3 million. These metrics highlight Reddit’s ability to attract and engage users outside the United States, which is critical for its advertising revenue.

One of the key drivers behind this international momentum is Reddit's investment in machine translation, which has enabled the platform to support content in more than 30 languages, helping to build local communities and increase engagement outside the United States. The company is also investing in features like bot verification, improved onboarding and faster app performance to enhance user experience.  The adoption of advanced ad products like Reddit Max and Dynamic Product Ads is helping advertisers achieve strong returns, further encouraging global brands to invest in Reddit’s platform.

Reddit’s international strategy is also supported by a growing sales footprint, with direct sales teams now operating in Canada, the U.K., Continental Europe and Australia, as well as channel partners covering additional regions.

RDDT’s expanding international portfolio and rising user engagement are expected to drive the company’s top-line growth. For the second quarter of 2026, management expects revenues to be in the range of $715 million to $725 million.

RDDT Faces Stiff CompetitionRDDT is facing stiff competition from competitors like Pinterest (PINS - Free Report) and Snap (SNAP - Free Report) . Both Pinterest and Snap are also expanding their global footprint to compete in the rapidly growing digital ad market.

Pinterest continues to expand monetization opportunities across international markets through deeper advertiser penetration and broader go-to-market initiatives. First-quarter 2026 revenues from Europe increased 27% year over year, while Rest of World revenues surged 59%. Global MAUs increased 11% to a record 631 million.

SNAP is benefiting from strong international expansion, as evidenced by its global monthly active users reaching 956 million in the first quarter of 2026, up 5% year over year, and Global Daily Active Users grew to 483 million or 5% year over year.

RDDT’s Share Price Performance, Valuation, and EstimatesRDDT shares have plunged 25.1% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector's increase of 13.1% and the Internet - Software industry’s decline of 14.1%.

RDDT Stock Performance
Image Source: Zacks Investment Research

RDDT shares are overvalued, with a forward 12-month Price/Sales of 8.91X compared with the Computer & Technology sector’s 6.55X. RDDT has a Value Score of F.

RDDT Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings is pegged at $4.83 per share, which has increased 1% over the past 30 days. This suggests 84.35% year-over-year growth.

RDDT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eight of the portfolio's 11 equity sectors made a positive impact on calendar year performance, led by Industrials, Materials, and Financials. nLIGHT differentiates itself via vertical integration, domain knowledge, and manufacturing capabilities to deliver cutting edge solutions, increasingly to government and defense organizations. Shares of Sprott outperformed as gold prices broke out to record highs amid elevated geopolitical risk, central bank buying, and a weaker U.S. dollar.

Ichor Holdings has underperformed peers in the current semiconductor cycle, particularly in high bandwidth and AI-driven demand. Recent commentary from ASML and other market leaders suggest semiconductor equipment WFE demand will broaden 15-20% in 2026, benefitting Ichor. ICHR's lagging performance has set up a snapback opportunity as the semiconductor bull market continues.

Posted by Defense World Staff on Apr 4th, 2026

JPMorgan Chase & Co. cut its stake in Ichor Holdings, Ltd. (NASDAQ:ICHR – Free Report) by 66.0% in the third quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission. The firm owned 237,863 shares of the technology company’s stock after selling 461,648 shares during the period. JPMorgan Chase & Co. owned about 0.69% of Ichor worth $4,167,000 at the end of the most recent quarter.

Several other large investors also recently bought and sold shares of the stock. Barrow Hanley Mewhinney & Strauss LLC raised its position in Ichor by 497.2% in the 3rd quarter. Barrow Hanley Mewhinney & Strauss LLC now owns 1,698,239 shares of the technology company’s stock valued at $29,753,000 after purchasing an additional 1,413,870 shares in the last quarter. Millennium Management LLC grew its position in shares of Ichor by 1,710.7% during the third quarter. Millennium Management LLC now owns 855,011 shares of the technology company’s stock worth $14,980,000 after buying an additional 807,792 shares in the last quarter. Invesco Ltd. increased its stake in shares of Ichor by 61.8% during the third quarter. Invesco Ltd. now owns 1,253,457 shares of the technology company’s stock worth $21,961,000 after buying an additional 478,952 shares during the period. Ameriprise Financial Inc. raised its holdings in Ichor by 231.3% in the second quarter. Ameriprise Financial Inc. now owns 393,371 shares of the technology company’s stock valued at $7,726,000 after acquiring an additional 274,633 shares in the last quarter. Finally, Alliancebernstein L.P. raised its holdings in Ichor by 42.0% in the second quarter. Alliancebernstein L.P. now owns 796,891 shares of the technology company’s stock valued at $15,651,000 after acquiring an additional 235,667 shares in the last quarter. Hedge funds and other institutional investors own 94.81% of the company’s stock.

Insiders Place Their Bets In related news, CEO Philip Ryan Sr. Barros sold 21,000 shares of the stock in a transaction on Thursday, February 26th. The shares were sold at an average price of $46.63, for a total value of $979,230.00. Following the transaction, the chief executive officer directly owned 153,936 shares of the company’s stock, valued at $7,178,035.68. This trade represents a 12.00% decrease in their position. The transaction was disclosed in a filing with the SEC, which is accessible through the SEC website. Also, Director Thomas M. Rohrs sold 53,908 shares of Ichor stock in a transaction on Thursday, February 12th. The stock was sold at an average price of $45.48, for a total transaction of $2,451,735.84. Following the sale, the director owned 53,024 shares in the company, valued at $2,411,531.52. This represents a 50.41% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. In the last 90 days, insiders have sold 120,259 shares of company stock worth $5,689,250. 1.90% of the stock is currently owned by company insiders.

Ichor Stock Performance Shares of Ichor stock opened at $48.12 on Friday. The company has a quick ratio of 1.38, a current ratio of 3.16 and a debt-to-equity ratio of 0.18. Ichor Holdings, Ltd. has a 52 week low of $13.12 and a 52 week high of $55.33. The firm’s 50 day moving average is $43.26 and its two-hundred day moving average is $27.96. The firm has a market capitalization of $1.67 billion, a P/E ratio of -31.25 and a beta of 1.67.

Wall Street Analyst Weigh In Several research analysts have commented on the stock. Craig Hallum reiterated a “buy” rating and set a $36.00 price target on shares of Ichor in a report on Wednesday, January 14th. Wall Street Zen raised shares of Ichor from a “strong sell” rating to a “hold” rating in a research report on Sunday, February 15th. Needham & Company LLC boosted their target price on shares of Ichor from $36.00 to $48.00 and gave the stock a “buy” rating in a research note on Tuesday, February 10th. DA Davidson raised their price target on Ichor from $30.00 to $53.00 and gave the company a “buy” rating in a research note on Wednesday, February 11th. Finally, B. Riley Financial upgraded Ichor from a “neutral” rating to a “buy” rating in a research note on Tuesday, February 10th. Six research analysts have rated the stock with a Buy rating, two have issued a Hold rating and one has issued a Sell rating to the company. According to data from MarketBeat, Ichor presently has a consensus rating of “Moderate Buy” and an average target price of $43.14.

Check Out Our Latest Stock Analysis on Ichor

Ichor Company Profile (Free Report)

Ichor Holdings Ltd. is a global supplier of critical subsystems used in the fabrication of semiconductor devices. The company specializes in the design, engineering and manufacturing of gas delivery systems, vacuum pumps and abatement solutions that manage process gases and by-products in wafer-processing tools. Its modular subsystems are designed to integrate with lithography, etch, deposition and cleaning equipment, helping to ensure precise control of gas flow, pressure and purity throughout the chip-manufacturing cycle.

Founded in the mid-1980s and headquartered in Fremont, California, Ichor has expanded its footprint across Asia, Europe and North America.

Featured Stories Five stocks we like better than Ichor Want to see what other hedge funds are holding ICHR? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Ichor Holdings, Ltd. (NASDAQ:ICHR – Free Report).

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Small-cap stocks have outperformed amid a rotation away from mega caps, despite geopolitical uncertainty and shifting interest rate expectations. Small-cap firms may benefit from the next phase of AI adoption as productivity gains broaden across industries. Wells Fargo estimates that each 1% reduction in labor costs could translate into a 6.1% earnings increase for Russell 2000 companies.

Key Takeaways Ichor shares surged 206.2% in six months, outperforming the semiconductor equipment industry.Ichor is riding a rebound in WFE spending driven by demand for AI, HBM and advanced packaging.Ichor is expanding in Malaysia and Mexico and tightening costs to strengthen operating leverage. Ichor Holdings, Ltd. (ICHR - Free Report) shares skyrocketed 206.2% over the past six months, outperforming the broader semiconductor equipment industry. The rally has been largely fueled by a rebound in wafer fabrication equipment (WFE) spending, driven by strong demand in artificial intelligence (AI), high-bandwidth memory (HBM) and advanced packaging. As chipmakers accelerate investments to support next-generation technologies, Ichor is likely to benefit from being a leading provider of fluid delivery subsystems.

Six-Month ICHR Stock Price Performance

Image Source: Zacks Investment Research

ICHR Buoyed By Strong Earnings MomentumA key catalyst behind the stock’s surge has been its improving earnings profile. Ichor reported better-than-expected quarterly results, coupled with optimistic guidance, indicating a turnaround from earlier weakness. Healthy revenue growth, supported by improving order trends and better demand visibility from customers, has strengthened investor confidence. This positive earnings momentum, along with a supportive industry backdrop, has resulted in multiple expansions and sharp earnings estimate revisions.

Image Source: Zacks Investment Research

ICHR Outpaces Peers on Higher Operating LeverageWhen compared with peers like Ultra Clean Holdings Inc. (UCTT - Free Report) , Cohu Inc. (COHU - Free Report) and Advanced Energy Industries Inc. (AEIS - Free Report) , Ichor stands out due to its higher sensitivity to semiconductor capital spending cycles. While larger players offer relatively stable growth, ICHR’s higher operating leverage allows it to generate outsized gains during industry upcycles. This dynamic has enabled the company to outperform several mid-cap rivals during the current recovery phase.

Cost Optimization, Niche Focus Aid ICHRIchor’s strategy focuses on enhancing its cost structure and expanding its global manufacturing footprint, particularly in lower-cost regions such as Malaysia and Mexico. Its specialized expertise in fluid delivery subsystems, which are critical components in semiconductor manufacturing, ensures strong customer relationships and recurring demand. This combination of cyclical tailwinds, disciplined execution and strategic positioning has been instrumental in driving ICHR’s stellar performance and underscores its appeal as a leveraged play on the semiconductor equipment upcycle.

Ichor currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the "long context," investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at Ichor Holdings (ICHR - Free Report) , a company that currently holds a Momentum Style Score of A. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score.

It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Ichor Holdings currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of "A or B" outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here >>>

Set to Beat the Market?Let's discuss some of the components of the Momentum Style Score for ICHR that show why this company shows promise as a solid momentum pick.

A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It's also helpful to compare a security to its industry; this can show investors the best companies in a particular area.

For ICHR, shares are up 14.35% over the past week while the Zacks Electronics - Semiconductors industry is up 10.33% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 26.14% compares favorably with the industry's 18.83% performance as well.

Considering longer term price metrics, like performance over the last three months or year, can be advantageous as well. Over the past quarter, shares of Ichor Holdings have risen 108.13%, and are up 266.17% in the last year. In comparison, the S&P 500 has only moved 3.01% and 38.52%, respectively.

Investors should also pay attention to ICHR's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. ICHR is currently averaging 628,172 shares for the last 20 days.

Earnings OutlookThe Zacks Momentum Style Score also takes into account trends in estimate revisions, in addition to price changes. Please note that estimate revision trends remain at the core of Zacks Rank as well. A nice path here can help show promise, and we have recently been seeing that with ICHR.

Over the past two months, 1 earnings estimate moved higher compared to none lower for the full year. This revision helped boost ICHR's consensus estimate, increasing from $1.11 to $1.15 in the past 60 days. Looking at the next fiscal year, 1 estimate has moved upwards while there have been no downward revisions in the same time period.

Bottom LineTaking into account all of these elements, it should come as no surprise that ICHR is a #2 (Buy) stock with a Momentum Score of A. If you've been searching for a fresh pick that's set to rise in the near-term, make sure to keep Ichor Holdings on your short list.

FREMONT, Calif.--(BUSINESS WIRE)--Ichor Holdings, Ltd. (NASDAQ: ICHR), a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment, today announced first quarter 2026 financial results.

First quarter 2026 highlights:

Revenue of $256.1 million, above the mid-point of our guidance range communicated in February; Gross margin of 12.6% on a GAAP basis and 12.8% on a non-GAAP basis; and Earnings (loss) per share of $(0.07) on a GAAP basis and $0.15 on a non-GAAP basis. “Within a strengthening demand environment, we are pleased to report Q1 results at the upper end of our expectations for revenues, gross margin, and earnings per share due to strong operational execution by our team,” commented Phil Barros, Ichor’s CEO. “Revenues of $256 million increased 15% sequentially, a strong start to what we expect will be a sustained industry upcycle driven by structural technology transitions and strategic capacity investments in wafer fabrication equipment. The early investments we made in ramping labor headcount and pre-positioning inventory are enabling Ichor to deliver strong execution for our customers and achieve revenue growth toward the high end of our demand forecast. With customer delivery timelines accelerating, our outlook for the second quarter reflects our expectation for another strong quarter of sequential improvement spanning revenues, gross margin, and earnings per share. We continue to drive the strategic, operational and technological priorities for Ichor that we expect will enable continued gross margin expansion and significant earnings leverage as revenues ramp through the year, and into 2027.”

Q1 2026

Q4 2025

Q1 2025

(dollars in thousands, except per share amounts)

U.S. GAAP Financial Results:

Net sales

$

256,068

$

223,606

$

244,465

Gross margin

12.6

%

9.4

%

11.7

%

Operating margin

0.8

%

(6.2

)%

(0.5

)%

Net loss

$

(2,469

)

$

(15,961

)

$

(4,559

)

Diluted EPS

$

(0.07

)

$

(0.46

)

$

(0.13

)

Q1 2026

Q4 2025

Q1 2025

(dollars in thousands, except per share amounts)

Non-GAAP Financial Results:

Gross margin

12.8

%

11.7

%

12.4

%

Operating margin

3.4

%

1.2

%

2.7

%

Net income

$

5,287

$

280

$

4,236

Diluted EPS

$

0.15

$

0.01

$

0.12

For the first quarter of 2026, revenue was $256.1 million, net loss was $(2.5) million, and net loss per diluted share (“diluted EPS”) was $(0.07). This compares to revenue of $223.6 million and $244.5 million, net loss of $(16.0) million and $(4.6) million, and diluted EPS of $(0.46) and $(0.13), for the fourth quarter of 2025 and first quarter of 2025, respectively.

For the first quarter of 2026, non-GAAP net income was $5.3 million and non-GAAP diluted EPS was $0.15. This compares to non-GAAP net income of $0.3 million and $4.2 million, and non-GAAP diluted EPS of $0.01 and $0.12, for the fourth quarter of 2025 and first quarter of 2025, respectively.

For the second quarter of 2026, we expect the following:

Low-End

Mid-Point

High-End

Revenue

$290 million

$300 million

$310 million

GAAP diluted EPS

$0.10

$0.15

$0.20

Non-GAAP diluted EPS

$0.25

$0.30

$0.35

This outlook for non‑GAAP diluted EPS excludes amortization of intangible assets of approximately $1.9 million and share-based compensation expense of approximately $4.4 million, as well as the related income tax effects. Non-GAAP diluted EPS should be considered in addition to, but not as a substitute for, our financial information presented in accordance with GAAP.

We ended the first quarter of 2026 with cash and cash equivalents of $89.1 million, a decrease of $9.2 million from the prior year ended December 26, 2025. The decrease of $9.2 million for the first quarter of 2026 was primarily due to capital expenditures of $7.1 million and cash used in operating activities of $2.9 million.

Our cash used in operating activities of $2.9 million for the first quarter of 2026 consisted of an increase in our net operating assets and liabilities of $12.7 million and a net loss of $2.5 million, partially offset by non-cash charges of $12.2 million, consisting primarily of depreciation and amortization of $7.7 million and share-based compensation expense of $3.8 million.

The increase in our net operating assets and liabilities of $12.7 million during the first quarter of 2026 was primarily due to an increase in accounts receivable of $22.6 million and an increase in inventory of $20.5 million, partially offset by an increase in accounts payable of $27.4 million, and a decrease in prepaid expenses and other assets of $2.9 million.

In addition to U.S. GAAP ("GAAP") results, this press release also contains non-GAAP financial results, including non‑GAAP gross profit, non‑GAAP operating income, non‑GAAP net income (loss), non‑GAAP diluted EPS, and free cash flow. Management uses non-GAAP metrics to evaluate our operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing investors’ ability to view our results from management’s perspective. Non-GAAP gross profit, operating income, and net income are defined as: gross profit, operating income (loss), or net income (loss), respectively, excluding (1) amortization of intangible assets, share-based compensation expense, and discrete or infrequent charges and gains that are outside of normal business operations, including transaction-related costs, contract and legal settlement gains and losses, facility shutdown costs, inventory impairment charges, and severance costs associated with reduction-in-force programs, to the extent they are present in gross profit, operating income (loss), and net income (loss), respectively; and (2) the tax impacts associated with these non-GAAP adjustments, as well as non-recurring discrete tax items, including the impact of deferred tax asset valuation allowances. All non-GAAP adjustments are presented on a gross basis; the related income tax effects, including current and deferred income tax expense, are included in the adjustment line under the heading "Tax adjustments related to non-GAAP adjustments." Non-GAAP diluted EPS is defined as non-GAAP net income divided by weighted average diluted ordinary shares outstanding during the period. Non-GAAP gross margin and non-GAAP operating margin are defined as non-GAAP gross profit and non-GAAP operating income, respectively, divided by net sales. Free cash flow is defined as cash provided by or used in operating activities, less capital expenditures. Tables showing these metrics on a GAAP and non-GAAP basis, with reconciliation footnotes thereto, are included at the end of this press release.

Non-GAAP results have limitations as analytical tools, and you should not consider them in isolation or as substitutes for our results reported under GAAP. Other companies may calculate non-GAAP results differently or may use other measures to evaluate their performance, both of which could reduce the usefulness of our non-GAAP results as tools for comparison.

Because of these limitations, you should consider non-GAAP results alongside other financial performance measures and results presented in accordance with GAAP. In addition, in evaluating non-GAAP results, you should be aware that in the future we will incur expenses such as those that are the subject of adjustments in deriving non-GAAP results, and you should not infer from our presentation of non-GAAP results that our future results will not be affected by these expenses or other discrete or infrequent charges and gains that are outside of normal business operations.

We will conduct a conference call to discuss our first quarter 2026 results and business outlook today at 1:30 p.m. PT.

To listen to a live webcast of the call, please visit our investor relations website at https://ir.ichorsystems.com, or go to the live link at https://www.webcast-eqs.com/login/ichor_q12026.

To listen via telephone, please call (877) 407‑0989 (domestic) or +1 (201) 389‑0921 (international), conference ID: 13759474. After the call, an on-demand replay will be available at the same webcast link.

We are a leader in the design, engineering and manufacturing of critical fluid delivery subsystems and components primarily for semiconductor capital equipment, as well as other industries such as defense/aerospace and medical. Our primary product offerings include gas and chemical delivery subsystems, collectively known as fluid delivery subsystems, which are key elements of the process tools used in the manufacturing of semiconductor devices. Our gas delivery subsystems deliver, monitor and control precise quantities of the specialized gases used in semiconductor manufacturing processes such as etch and deposition. Our chemical delivery subsystems precisely blend and dispense the reactive liquid chemistries used in semiconductor manufacturing processes such as chemical-mechanical planarization, electroplating, and cleaning. We also provide precision-machined components, weldments, e-beam and laser welded components, precision vacuum and hydrogen brazing, surface treatment technologies, and other proprietary products. We are headquartered in Fremont, CA. https://ir.ichorsystems.com.

We use a 52- or 53-week fiscal year ending on the last Friday in December. The three-month periods ended March 27, 2026, December 26, 2025, and March 28, 2025 were each 13 weeks. References to the first quarter of 2026, fourth quarter of 2025, and first quarter of 2025 relate to the three-month periods then ended. Our fiscal years ended December 25, 2026 and December 26, 2025 are each 52 weeks. References to 2026 and 2025 relate to the fiscal years then ended.

Certain statements in this release are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “anticipate,” “believe,” “contemplate,” “designed,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “outlook,” “plan,” “predict,” “project,” “see,” “seek,” “target,” “would” and similar expressions or variations or negatives of these words are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, but are not limited to, statements regarding our outlook for our second fiscal quarter of 2026 and beyond, statements regarding the current business environment, revenue levels in 2026 and beyond, manufacturers’ investment in wafer fabrication equipment, our investment in research and development of new products, acquiring new business, and company and industry growth and performance in 2026 and beyond, as well as any other statement that does not directly relate to any historical fact. Such forward-looking statements are based on management’s current expectations about future events as of the date hereof and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Our actual results and outcomes could differ materially from those included in these forward-looking statements as a result of various factors, including, but not limited to: geopolitical, economic and market conditions, including high inflation, changes to tax, trade, fiscal and monetary policy, high interest rates, currency fluctuations, challenges in the supply chain and any disruptions in the global economy as a result of the conflicts in Ukraine and the Middle East; being unable to attract, hire, integrate and retain key personnel and other necessary employees; dependence on expenditures by manufacturers and cyclical downturns in the semiconductor capital equipment industry; reliance on a very small number of original equipment manufacturers ("OEMs") for a significant portion of sales; negotiating leverage held by our customers; competitiveness and rapid evolution of the industries in which we participate; keeping pace with developments in the industries we serve and with technological innovation generally; designing, developing and introducing new products that are accepted by OEMs in order to retain our existing customers and obtain new customers; becoming involved in litigation and regulatory proceedings, which could require significant attention from our management and result in significant expense to us and disruptions in our business; managing our manufacturing and procurement process effectively; defects in our products that could damage our reputation, decrease market acceptance and result in potentially costly litigation; and our dependence on a limited number of suppliers. Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission (the “SEC”), including other risks, relevant factors, and uncertainties identified in the "Risk Factors" section of our Annual Report on Form 10‑K for the year ended December 26, 2025 and any other periodic reports that we may file with the SEC.

All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. We undertake no obligation to update or revise any forward-looking statements contained herein, whether as a result of actual results, changes in our expectations, future events or developments, or otherwise, except as required by law.

  ICHOR HOLDINGS, LTD.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)

  March 27,
2026

December 26,
2025

March 28,
2025

Assets

Current assets:

Cash and cash equivalents

$

89,089

$

98,290

$

109,281

Accounts receivable, net

93,067

70,514

79,859

Inventories

252,299

231,794

263,454

Prepaid expenses and other current assets

7,639

9,531

7,240

Total current assets

442,094

410,129

459,834

Property and equipment, net

103,551

103,922

103,372

Operating lease right-of-use assets

35,126

35,046

42,232

Other noncurrent assets

13,664

13,638

15,066

Deferred tax assets, net

4,338

4,337

4,069

Intangible assets, net

38,327

40,405

46,638

Goodwill

335,402

335,402

335,402

Total assets

$

972,502

$

942,879

$

1,006,613

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

108,175

$

84,007

$

102,532

Accrued liabilities

16,528

17,479

17,326

Other current liabilities

13,516

10,602

10,149

Current portion of long-term debt

6,250

6,250

7,500

Current portion of lease liabilities

12,203

11,250

11,409

Total current liabilities

156,672

129,588

148,916

Long-term debt, less current portion, net

115,793

117,278

119,264

Lease liabilities, less current portion

24,419

25,413

31,632

Deferred tax liabilities, net

2,627

1,961

1,555

Other non-current liabilities

4,977

4,753

4,885

Total liabilities

304,488

278,993

306,252

Shareholders’ equity:

Preferred shares ($0.0001 par value; 20,000,000 shares authorized; zero shares issued and outstanding)

—

—

—

Ordinary shares ($0.0001 par value; 200,000,000 shares authorized; 34,744,772, 34,433,776, and 34,113,204 shares outstanding, respectively; 39,182,211, 38,871,215, and 38,550,643 shares issued, respectively)

3

3

3

Additional paid in capital

630,988

624,391

612,644

Treasury shares at cost (4,437,439 shares)

(91,578

)

(91,578

)

(91,578

)

Retained earnings

128,601

131,070

179,292

Total shareholders’ equity

668,014

663,886

700,361

Total liabilities and shareholders’ equity

$

972,502

$

942,879

$

1,006,613

  ICHOR HOLDINGS, LTD.

Consolidated Statement of Operations

(in thousands, except share and per share amounts)

(unaudited)

Three Months Ended

March 27,
2026

December 26,
2025

March 28,
2025

Net sales

$

256,068

$

223,606

$

244,465

Cost of sales

223,810

202,624

215,943

Gross profit

32,258

20,982

28,522

Operating expenses:

Research and development

5,530

5,604

5,874

Selling, general, and administrative

22,565

27,135

21,742

Amortization of intangible assets

2,078

2,078

2,078

Total operating expenses

30,173

34,817

29,694

Operating income (loss)

2,085

(13,835

)

(1,172

)

Interest expense, net

1,678

1,686

1,646

Other expense, net

323

308

81

Income (loss) before income taxes

84

(15,829

)

(2,899

)

Income tax expense

2,553

132

1,660

Net loss

$

(2,469

)

$

(15,961

)

$

(4,559

)

Net loss per share:

Basic

$

(0.07

)

$

(0.46

)

$

(0.13

)

Diluted

$

(0.07

)

$

(0.46

)

$

(0.13

)

Shares used to compute net loss per share:

Basic

34,607,033

34,404,875

33,998,364

Diluted

34,607,033

34,404,875

33,998,364

  ICHOR HOLDINGS, LTD.

Consolidated Statements of Cash Flows

(in thousands) (unaudited)

Three Months Ended

March 27,
2026

December 26,
2025

March 28,
2025

Cash flows from operating activities:

Net loss

$

(2,469

)

$

(15,961

)

$

(4,559

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

7,654

10,044

8,058

Impairment of inventory

—

3,098

—

Share-based compensation

3,833

4,157

4,123

Impairment of lease right-of-use assets

—

507

—

Deferred income taxes

665

(1,815

)

247

Amortization of debt issuance costs

78

77

116

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable, net

(22,553

)

13,886

6,760

Inventories

(20,505

)

6,788

(13,352

)

Prepaid expenses and other assets

2,856

300

2,837

Accounts payable

27,382

(8,252

)

14,307

Accrued liabilities

(531

)

(1,192

)

1,804

Other liabilities

673

(2,467

)

(1,364

)

Net cash provided by (used in) operating activities

(2,917

)

9,170

18,977

Cash flows from investing activities:

Capital expenditures

(7,065

)

(3,249

)

(18,481

)

Net cash used in investing activities

(7,065

)

(3,249

)

(18,481

)

Cash flows from financing activities:

Issuance of ordinary shares under share-based compensation plans

4,766

356

4,004

Employees' taxes paid upon vesting of restricted share units

(2,422

)

(487

)

(2,013

)

Repayments on term loan

(1,563

)

—

(1,875

)

Net cash provided by (used in) financing activities

781

(131

)

116

Net increase (decrease) in cash

(9,201

)

5,790

612

Cash at beginning of period

98,290

92,500

108,669

Cash at end of period

$

89,089

$

98,290

$

109,281

Supplemental disclosures of cash flow information:

Cash paid during the period for interest

$

1,959

$

1,386

$

2,251

Cash paid during the period for taxes, net of refunds

$

(686

)

$

1,125

$

560

Supplemental disclosures of non-cash activities:

Capital expenditures included in accounts payable

$

412

$

3,626

$

1,467

Right-of-use assets obtained in exchange for new operating lease liabilities

$

2,424

$

—

$

—

  ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Gross Profit to Non-GAAP Gross Profit

(dollars in thousands)

(unaudited)

Three Months Ended

March 27,
2026

December 26,
2025

March 28,
2025

U.S. GAAP gross profit

$

32,258

$

20,982

$

28,522

Non-GAAP adjustments:

Share-based compensation

545

602

707

Restructuring plan costs (1)

—

3,998

—

Facility shutdown costs (2)

—

496

304

Other (3)

—

—

783

Non-GAAP gross profit

$

32,803

$

26,078

$

30,316

U.S. GAAP gross margin

12.6

%

9.4

%

11.7

%

Non-GAAP gross margin

12.8

%

11.7

%

12.4

%

ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Operating Income (Loss) to Non-GAAP Operating Income

(dollars in thousands)

(unaudited)

Three Months Ended

March 27,
2026

December 26,
2025

March 28,
2025

U.S. GAAP operating income (loss)

$

2,085

$

(13,835

)

$

(1,172

)

Non-GAAP adjustments:

Share-based compensation

3,833

4,157

4,123

Amortization of intangible assets

2,078

2,078

2,078

Restructuring plan costs (1)

549

9,058

—

Facility shutdown costs (2)

114

1,220

592

Other (3)

—

—

954

Non-GAAP operating income

$

8,659

$

2,678

$

6,575

U.S. GAAP operating margin

0.8

%

(6.2

)%

(0.5

)%

Non-GAAP operating margin

3.4

%

1.2

%

2.7

%

ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Net Loss to Non-GAAP Net Income

(in thousands, except share and per share amounts)

(unaudited)

Three Months Ended

March 27,
2026

December 26,
2025

March 28,
2025

U.S. GAAP net loss

$

(2,469

)

$

(15,961

)

$

(4,559

)

Non-GAAP adjustments:

Share-based compensation

3,833

4,157

4,123

Amortization of intangible assets

2,078

2,078

2,078

Restructuring plan costs (1)

549

9,058

—

Facility shutdown costs (2)

114

1,220

592

Other (3)

—

—

954

Tax adjustments related to non-GAAP adjustments (4)

1,182

(272

)

711

Tax expense from valuation allowance (5)

—

—

337

Non-GAAP net income

$

5,287

$

280

$

4,236

U.S. GAAP diluted EPS

$

(0.07

)

$

(0.46

)

$

(0.13

)

Non-GAAP diluted EPS

$

0.15

$

0.01

$

0.12

Shares used to compute non-GAAP diluted EPS

35,297,664

34,580,920

34,206,989

(1)

Represents the costs associated with our Consolidation Restructuring Plan. Included in this amount for the first quarter of 2026 and fourth quarter of 2025 are: (i) other direct and incremental restructuring related costs of $0.4 million and $1.2 million, respectively; (ii) fixed asset charges of $0.1 million and $2.6 million, respectively; (iii) inventory impairment costs of $0.0 million and $3.1 million, respectively; (iv) severance costs associated with affected employees of $0.0 million and $1.7 million, respectively; and (v) ROU asset impairment costs of $0.0 million and $0.5 million, respectively.

(2)

Represents costs associated with the exit from our Scotland and Korea operations. Included in this amount for the first quarter of 2026, fourth quarter of 2025, and for the first quarter of 2025 are: (i) other direct and incremental facility exit-related costs of $0.1 million, $0.6 million, and $0.0 million, respectively; (ii) severance costs associated with affected employees of $0.0 million, $0.5 million, and $0.6 million, respectively; and (iii) inventory write-off charges of $0.0 million, $0.1 million, and $0.0 million, respectively.

(3)

Represents severance costs associated with our global reduction-in-force programs (other than severance costs associated with the exit from our Scotland and Korea operations, as described above).

(4)

Adjusts GAAP income tax expense for the impact of our non-GAAP adjustments, which are presented on a gross basis.

(5)

During the first quarter of 2025, we recorded a valuation allowance against the deferred tax assets of our Scotland and Korean operations.

ICHOR HOLDINGS, LTD.

Reconciliation of U.S. GAAP Net Cash Provided by Operating Activities to Free Cash Flow

(in thousands)

(unaudited)

Three Months Ended

March 27,
2026

December 26,
2025

March 28,
2025

Net cash provided by (used in) operating activities

$

(2,917

)

$

9,170

$

18,977

Capital expenditures

(7,065

)

(3,249

)

(18,481

)

Free cash flow

$

(9,982

)

$

5,921

$

496

More News From Ichor Holdings, Ltd.

Ichor Holdings (ICHR - Free Report) came out with quarterly earnings of $0.15 per share, beating the Zacks Consensus Estimate of $0.13 per share. This compares to earnings of $0.12 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of +13.21%. A quarter ago, it was expected that this company would post a loss of $0.06 per share when it actually produced earnings of $0.01, delivering a surprise of +116.67%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

Ichor Holdings, which belongs to the Zacks Electronics - Semiconductors industry, posted revenues of $256.07 million for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 1.19%. This compares to year-ago revenues of $244.46 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Ichor Holdings shares have added about 249.5% since the beginning of the year versus the S&P 500's gain of 5.6%.

What's Next for Ichor Holdings?While Ichor Holdings has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Ichor Holdings was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.22 on $264.38 million in revenues for the coming quarter and $1.15 on $1.14 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Semiconductors is currently in the top 32% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, GlobalFoundries Inc. (GFS - Free Report) , is yet to report results for the quarter ended March 2026. The results are expected to be released on May 5.

This company is expected to post quarterly earnings of $0.35 per share in its upcoming report, which represents a year-over-year change of +2.9%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

GlobalFoundries Inc.'s revenues are expected to be $1.62 billion, up 2.4% from the year-ago quarter.

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In "long context," investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at Ichor Holdings (ICHR - Free Report) , a company that currently holds a Momentum Style Score of A. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score.

It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Ichor Holdings currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of "A or B" outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here >>>

Set to Beat the Market? In order to see if ICHR is a promising momentum pick, let's examine some Momentum Style elements to see if this company holds up.

A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It's also helpful to compare a security to its industry; this can show investors the best companies in a particular area.

For ICHR, shares are up 15.52% over the past week while the Zacks Electronics - Semiconductors industry is up 5.15% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 27.25% compares favorably with the industry's 26.89% performance as well.

Considering longer term price metrics, like performance over the last three months or year, can be advantageous as well. Over the past quarter, shares of Ichor Holdings have risen 64.53%, and are up 317.98% in the last year. In comparison, the S&P 500 has only moved 7.12% and 32.44%, respectively.

Investors should also pay attention to ICHR's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. ICHR is currently averaging 1,045,197 shares for the last 20 days.

Earnings OutlookThe Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock's price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with ICHR.

Over the past two months, 4 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost ICHR's consensus estimate, increasing from $1.11 to $1.41 in the past 60 days. Looking at the next fiscal year, 4 estimates have moved upwards while there have been no downward revisions in the same time period.

Bottom LineGiven these factors, it shouldn't be surprising that ICHR is a #2 (Buy) stock and boasts a Momentum Score of A. If you're looking for a fresh pick that's set to soar in the near-term, make sure to keep Ichor Holdings on your short list.

Philip Ryan Barros, Chief Executive Officer of Ichor Holdings (ICHR +16.45%), reported the sale of 13,705 ordinary shares for a transaction value of approximately $962,000, following an option exercise and immediate sale, according to the SEC Form 4 filing.

Transaction summaryMetricValueContextShares sold (direct)13,705Direct open-market shares sold in this filing.Transaction value$962,000Based on SEC Form 4 weighted average purchase price ($70.19).Post-transaction shares (direct)165,078Directly held shares after transaction completion.Post-transaction value (direct ownership)~$11.73 millionBased on June 4, 2026 market close.Transaction value based on SEC Form 4 weighted average purchase price ($70.19); post-transaction value based on June 4, 2026 market close.

Key questionsWhat is the derivative context behind this transaction?
This sale followed the exercise of 1,403 options, with all resulting shares immediately sold.Did the sale materially impact direct ownership or control?
The transaction reduced Barros's direct holdings by 7.67%, leaving him with 165,078 shares, which accounts for approximately 0.47% of the company’s outstanding shares as of the latest data.How does this transaction compare with Barros's historical trade cadence and size?
Barros averages nearly seven equity transactions per year, with recent open-market sales sized between 15,539 and 21,000 shares; this latest sale, at 13,705 shares, is consistent with the pattern but slightly lower due to a shrinking direct share base.Does the sale reflect any change in indirect or derivative holdings?
No; Barros did not disclose indirect shares or additional derivative securities in this filing, and the transaction affected only directly-held ordinary shares.Company overviewMetricValueEmployees1,820Revenue (TTM)$959.25 millionNet income (TTM)($50.69 million)1-year price change258.05%* 1-year performance calculated using June 4, 2026 as the reference date.

Company snapshotIchor designs and manufactures fluid delivery subsystems, including gas and chemical delivery systems, for semiconductor capital equipment.It generates revenue primarily by supplying OEMs with proprietary subsystems and precision components used in semiconductor manufacturing processes.The company serves leading semiconductor equipment manufacturers globally, with a focus on the United States, Asia, and Europe.Ichor Holdings is a leading provider of critical fluid delivery subsystems and components for the semiconductor industry, leveraging engineering expertise and proprietary technologies to support advanced manufacturing processes.

The company’s scale and global reach enable it to serve major OEMs in key semiconductor markets, positioning it as a vital supplier within the sector.

What this transaction means for investorsThe June 4 sale of Ichor Holdings stock by CEO Philip Barros came at a time when shares were on an upward trajectory, eventually reaching a 52-week high of $80.74 on June 10. Given this, it would be natural for Barros to sell, but this was a non-discretionary disposition.

Barros sold the stock as part of a pre-arranged Rule 10b5-1 trading plan, adopted in March of 2026. Such plans are often implemented by insiders to avoid accusations of trading based on insider information. As a result, the transaction does not appear to be a cause for investor concern.

Ichor Holdings stock is on the upswing thanks to artificial intelligence. AI demand has led to growth in semiconductor manufacturing, and the company provides critical fluid delivery subsystems and components to manufacturers.

Consequently, Ichor reported revenue of $256.1 million in its fiscal first quarter ended March 27, up from the prior year’s $244.5 million. The company anticipates sales will accelerate to at least $290 million in its fiscal Q2, helping to propel its stock price higher.

Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Ultra Clean Holdings, Inc. (UCTT) Q1 2026 Earnings Call Transcript

Shares of Ultra Clean Holdings (UCTT - Free Report) have gained 18.1% over the past four weeks to close the last trading session at $74.61, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $98 indicates a potential upside of 31.4%.

The mean estimate comprises four short-term price targets with a standard deviation of $4. While the lowest estimate of $92.00 indicates a 23.3% increase from the current price level, the most optimistic analyst expects the stock to surge 34% to reach $100.00. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.

While the consensus price target is a much-coveted metric for investors, solely banking on this metric to make an investment decision may not be wise at all. That's because the ability and unbiasedness of analysts in setting price targets have long been questionable.

However, an impressive consensus price target is not the only factor that indicates a potential upside in UCTT. This view is strengthened by the agreement among analysts that the company will report better earnings than what they estimated earlier. Though a positive trend in earnings estimate revisions doesn't give any idea as to how much the stock could surge, it has proven effective in predicting an upside.

Price, Consensus and EPS Surprise

Here's What You May Not Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.

While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?

They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.

However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.

That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.

Why UCTT Could Witness a Solid UpsideAnalysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason to expect an upside in the stock. That's because empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The Zacks Consensus Estimate for the current year has increased 29.9% over the past month, as one estimate has gone higher compared to no negative revision.

Moreover, UCTT currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .

Therefore, while the consensus price target may not be a reliable indicator of how much UCTT could gain, the direction of price movement it implies does appear to be a good guide.

Ultra Clean Holdings (UCTT - Free Report) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.

Analysts' growing optimism on the earnings prospects of this chipmaking equipment services company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Ultra Clean Holdings, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate RevisionsThe company is expected to earn $0.53 per share for the current quarter, which represents a year-over-year change of +96.3%.

Over the last 30 days, the Zacks Consensus Estimate for Ultra Clean has increased 60.71% because one estimate has moved higher compared to no negative revisions.

Current-Year Estimate RevisionsFor the full year, the company is expected to earn $2.35 per share, representing a year-over-year change of +123.8%.

The revisions trend for the current year also appears quite promising for Ultra Clean, with one estimate moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 29.94%.

Favorable Zacks RankThe promising estimate revisions have helped Ultra Clean earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom LineUltra Clean shares have added 15.5% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.

Leading contributors in the First Eagle Small Cap Opportunity Fund this quarter included Ultra Clean Holdings, Oil States International, Lincoln Educational Services, Advanced Energy and FormFactor. Oil States International shares rallied on very strong bookings during the quarter and improved operator-powered solutions and services inside the wellbore. The leading detractors in the quarter were Vital Farms, Alphatec Holdings, Beta Bionics, SI-BONE. and Herc Holdings.

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, May 20:

Lumentum Holdings Inc. (LITE - Free Report) : This photonics company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 6.5% over the last 60 days.

Lumentum's shares gained 33.3% over the last three months compared with the S&P 500’s decline of 7.5%. The company possesses a Momentum Score of A.

Ultra Clean Holdings, Inc. (UCTT - Free Report) : Thissemiconductor equipment and services company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 23.7% over the last 60 days.

Ultra Clean’s shares gained 30.2% over the last three months compared with the S&P 500’s decline of 7.5%. The company possesses a Momentum Score of A.

Applied Materials, Inc. (AMAT - Free Report) : This semiconductor materials engineering company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 5.8% over the last 60 days.

Applied’s shares gained 8.4% over the last three months compared with the S&P 500’s decline of 7.5%. The company possesses a Momentum Score of B.

See the full list of top ranked stocks here

Learn more about the Momentum score and how it is calculated here.

Key Takeaways UCTT shares surged 321.5% in a year, beating the industry's 210.6% gain.AI-led demand for advanced chips is boosting WFE needs, lifting subsystem content per tool.Global fab buildouts plus Products and recurring Services revenue support long-term demand tailwinds. Ultra Clean Holdings, Inc. (UCTT - Free Report) has surged a stellar 321.5% in the past year compared with the industry’s growth of 210.6%. It has outperformed peers like Veeco Instruments Inc. (VECO - Free Report) and Kulicke and Soffa Industries, Inc. (KLIC - Free Report) . While Veeco has gained 210.2%, KLIC jumped 227.3% over this period.

Ultra Clean is well-positioned to capitalize on the next wave of semiconductor industry growth, fueled by robust artificial intelligence (AI) spending, advanced chip manufacturing and expanding global fab investments. The company operates as a critical supplier to the semiconductor equipment industry, providing high-purity subsystems, precision components and contamination-control services used in wafer fabrication processes. As chipmakers ramp investments in advanced nodes and AI infrastructure, Ultra Clean stands to benefit from rising wafer fabrication equipment (WFE) demand.

One-Year Stock Price Performance of UCTT

Image Source: Zacks Investment Research

AI Spending Emerging as Major Growth CatalystThe rapid adoption of generative AI applications is driving unprecedented demand for high-performance computing chips, GPUs and advanced memory solutions. This trend has triggered aggressive capital spending by semiconductor manufacturers to expand leading-edge production capacity.

Ultra Clean’s products are embedded in semiconductor manufacturing equipment used for advanced logic and memory production. Increasing complexity at 3nm and 2nm nodes is driving higher subsystem content per tool, creating favorable growth opportunities for the company. It is also benefiting from growing investments in advanced packaging and high-bandwidth memory technologies, both of which are essential for AI workloads.

Strong Exposure to Long-Term Semiconductor TrendsUltra Clean remains strategically aligned with several secular semiconductor growth drivers, including AI and data center expansion, advanced node transitions, advanced packaging adoption and rising semiconductor equipment intensity.

The company’s dual business model further strengthens its growth profile. While its Products segment supplies critical subsystems and assemblies to semiconductor OEMs, its Services segment generates recurring revenue through ultra-high purity cleaning and contamination-control solutions for semiconductor fabs.

As semiconductor manufacturing processes become increasingly sophisticated, demand for precision-engineered components and contamination management solutions continues to rise.

Global Fab Expansion Supporting DemandGovernments and semiconductor companies worldwide continue investing heavily in domestic chip manufacturing capabilities. The U.S. CHIPS Act and similar initiatives across Asia and Europe are driving a multi-year fab expansion cycle. Ultra Clean has built a broad global manufacturing and service footprint across North America, Asia and Europe, enabling it to support customers near key semiconductor production hubs. This geographic diversification not only improves operational flexibility but also positions the company to benefit from regional supply chain localization initiatives.

Strategic Buyouts Enhance CapabilitiesUltra Clean has consistently expanded its technological and operational capabilities through acquisitions. The buyouts have broadened its addressable market while enhancing its ability to serve increasingly complex semiconductor manufacturing requirements. Management also continues to evaluate strategic opportunities aimed at expanding technology offerings and improving long-term profitability.

The company is focused on operational improvements to drive margin expansion. It has implemented several efficiency initiatives, including facility optimization, organizational streamlining and enterprise system upgrades. Management’s long-term “UCT 3.0” strategy targets higher revenue growth and improved profitability through manufacturing optimization, service expansion and increased penetration of higher-value semiconductor applications.

Moving ForwardUltra Clean appears well-positioned to benefit from favorable semiconductor industry fundamentals. Strong AI-driven demand, expanding global semiconductor investments, advanced packaging growth and rising equipment complexity are expected to serve as key long-term growth drivers.

While semiconductor spending remains cyclical, Ultra Clean’s expanding role in precision subsystems, contamination-control solutions and fab services strengthens its long-term growth outlook. Investors, therefore, are likely to benefit if they invest in this high-flying Zacks Rank #1 (Strong Buy) stock now. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ultra Clean (UCTT) saw its shares surge in the last session with trading volume being higher than average. The latest trend in earnings estimate revisions may not translate into further price increase in the near term.

Ultra Clean Holdings (UCTT - Free Report) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.

A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.

Since a changing earnings picture is a powerful factor influencing near-term stock price movements, the Zacks rating system is very useful for individual investors. They may find it difficult to make decisions based on rating upgrades by Wall Street analysts, as these are mostly driven by subjective factors that are hard to see and measure in real time.

Therefore, the Zacks rating upgrade for Ultra Clean basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.

Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their bulk investment action then leads to price movement for the stock.

Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Ultra Clean imply an improvement in the company's underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.

Harnessing the Power of Earnings Estimate RevisionsEmpirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.

The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .

Earnings Estimate Revisions for Ultra CleanFor the fiscal year ending December 2026, this chipmaking equipment services company is expected to earn $2.35 per share, which is unchanged compared with the year-ago reported number.

Analysts have been steadily raising their estimates for Ultra Clean. Over the past three months, the Zacks Consensus Estimate for the company has increased 29.9%.

Bottom LineUnlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.

You can learn more about the Zacks Rank here >>>

The upgrade of Ultra Clean to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.

Key Takeaways Applied Optoelectronics stock jumped 635.5% in six months, far outpacing its industry's return. AAOI cites Mediacom deal upside, but flags stiff competition from the likes of Lumentum and Coherent. Applied Optoelectronics' unfavorable valuation picture and timid earnings history represent a huge concern. Shares of Applied Optoelectronics (AAOI - Free Report) , which designs and manufactures fiber-optic networking products for internet data centers, cable television, telecommunications and fiber-to-the-home end markets, have performed brilliantly over the past six months, gaining a massive 635.5%. Owing to this solid rally, shares of this maker of fiber optic products used by cable TV providers have easily surpassed the Zacks Electronics - Semiconductors industry’s return of 33.7%.

6-Month Price ComparisonImage Source: Zacks Investment Research

Given AAOI’s impressive rally, investors might wonder if the opportunity to add this high-flying stock to their portfolio has passed. Let's delve deeper to find out how investors should approach AAOI stock in the current scenario.

Other Factors Working in Favor of AAOIUpbeat Demand Scenario: Applied Optoelectronics is gaining from the rising demand for its 400G and 800G solutions as enterprises worldwide transition from traditional data centers to AI-focused infrastructure. AI-driven data centers require advanced networking capabilities and high-speed optical interconnect solutions to handle significantly larger workloads, which are essential for next-generation computing architectures.

AAOI management expects 800G to become the largest data center revenue line shortly, with forecast demand projected to exceed production capacity through mid-2027. Full qualification of additional 800G products in Texas is expected soon, enabling an increase in U.S. shipments. 

Technical Strength: AAOI currently has a Momentum Score of A. Technical indicators suggest continued strong performance for Applied Optoelectronics. The stock trades above its 200-day moving average, signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment and confidence in AAOI’s prospects.

200-Day Moving Average Data of AAOI StockImage Source: Zacks Investment Research

Deal With Mediacom Bodes Well:Earlier this month, Applied Optoelectronics announced a collaboration with Mediacom to support the acceleration and continued expansion of its fiber and coaxial network infrastructure.

Mediacom, the fifth-largest cable operator in the United States, provides high-speed internet, video, phone and mobile services to more than three million residential and business customers across 22 states. The agreement is likely to strengthen Applied Optoelectronics’ position in the broadband infrastructure market by expanding the adoption of its DOCSIS 4.0-related products among major North American cable operators.

The collaboration could also support recurring demand for Applied Optoelectronics’ amplifier and network management solutions as Mediacom continues its multi-year network upgrade program. In addition, the deal reinforces Applied Optoelectronics’ role in enabling next-generation broadband connectivity solutions that combine fiber-like performance with existing coaxial networks.

Challenges That Cannot Be OverlookedStiff Competition: Applied Optoelectronics is facing stiff competition from Lumentum (LITE - Free Report) and Coherent (COHR - Free Report) in the optical networking market. Coherent and Lumentum’s partnerships with NVIDIA pose a significant threat to AAOI. In March, Coherent and NVIDIA announced a multi-year strategic agreement to develop advanced optical technologies used in AI data centers. Also, NVIDIA has announced a multi-year strategic partnership with Lumentum to develop advanced optical technologies used in AI data centers. 

NVIDIA will invest $2 billion in Lumentum to support research and development, expand manufacturing capacity and strengthen operations as the latter builds a new fabrication facility in the United States.

Stretched Valuation: Applied Optoelectronics’ expensive valuation is a concern for investors. AAOI’s Value Score of F suggests a stretched valuation for the stock at this moment.

Image Source: Zacks Investment Research

Unimpressive Earnings History: Applied Optoelectronics’ earnings have outpaced the Zacks Consensus Estimate in two of the past four quarters (missing the mark on the other occasions). The average miss is 9.6%.

End NoteApplied Optoelectronics’ prospects are aided by its strong portfolio. Vertical integration and expanding U.S. manufacturing de-risk supply, costs and policy exposure. However, its valuation picture is far from encouraging. Its earnings surprise history and stiff competition add to the list of concerns.

While it is clear that Applied Optoelectronics offers attractive long-term upside potential, the risk-reward profile appears more balanced at current levels, given the mixed factors highlighted in the write-up. With a current Zacks Rank #3 (Hold), new investors may prefer waiting for a better entry point.  Existing investors may want to retain AAOI stock for now.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

The AI boom has already burned through one shortage after another. First it was GPUs. Then high-bandwidth memory. Then power infrastructure, transformers, cooling systems, and even land near major electric grids. Yet as hyperscalers continue pouring hundreds of billions into AI data centers, another chokepoint is moving front and center — optics.

That may sound niche, but it sits at the heart of how AI clusters communicate. Without optical networking, the latest AI systems simply cannot move data fast enough between thousands of GPUs. And according to a new report from Rosenblatt Securities, Nvidia (NASDAQ:NVDA) recently asked suppliers to increase indium phosphide (InP) laser capacity by 20x through 2030. Suppliers reportedly countered with a still-massive 12x increase instead.

That gap tells investors something important: demand expectations are enormous, but suppliers remain cautious about overbuilding.

Why Optics Became the AI Industry’s New Pressure Point AI models are growing too large for traditional networking. Training clusters increasingly require tens of thousands of GPUs connected with ultra-fast optical interconnects so data can move with minimal latency. Copper cables simply cannot keep up at scale.

Rosenblatt estimates the InP optics market could grow from roughly $1.9 billion in 2025 to $22.75 billion by 2030 — a nearly 12-fold increase in annual laser revenue capacity.

Here’s what the firm projects for major suppliers by 2030:

Company 2025 Capacity 2030 Capacity Projection Lumentum (NASDAQ:LITE | LITE Price Prediction) $600 million $9.0 billion Coherent (NASDAQ:COHR) $125 million $4.3 billion Broadcom (NASDAQ:AVGO) $550 million $4.5 billion Mitsubishi $250 million $1.05 billion Sumitomo $250 million $1.0 billion Applied Optoelectronics (NASDAQ:AAOI) $60 million $2.1 billion Source: Rosenblatt Securities industry update, May 2026.

Investors have noticed. Over the past year:

Lumentum climbed 1,048% AXT (NASDAQ:AXTI) surged 7,421% Lightwave Logic (NASDAQ:LWLG) gained 1,073% Applied Optoelectronics advanced 872%, even after a 26% pullback Those gains look wild at first glance. Surprisingly, they may reflect how unprepared the industry was for AI networking demand rather than pure speculation.

Why Nvidia Wants So Much More Supply The shift toward co-packaged optics, or CPO, is driving the urgency. CPO moves optical connections closer to the AI chip itself, improving speed while reducing power consumption — a growing problem as racks consume more electricity.

For Nvidia, the math is straightforward. More GPUs require exponentially more bandwidth. A single AI cluster with 100,000 accelerators can create networking bottlenecks that erase the benefit of adding more compute.

That is why Rosenblatt says Nvidia pushed for a 20x increase in optics supply. Regardless of how you look at it, Nvidia appears worried that networking constraints could slow AI deployment before GPU demand slows.

Granted, suppliers have reasons to resist committing fully. Building InP fabrication capacity is expensive, technically difficult, and risky if demand cools. Rosenblatt noted suppliers remain concerned about repeating past telecom cycles where excess optical capacity crushed margins.

In short, suppliers remember the last boom-and-bust cycle.

Which Stocks Rosenblatt Likes — And Which May Lag Rosenblatt appears most bullish on Coherent and Lumentum. The firm said Coherent could benefit from revenue acceleration and rising production on six-inch wafers, which improve manufacturing efficiency. Rosenblatt also expects Lumentum to expand toward nearly 10% transceiver market share while benefiting from the shift into CPO lasers.

That said, the firm was less enthusiastic about Applied Optoelectronics. Rosenblatt argued the stock’s surge already prices in much of the expected AI demand increase. It also warned Applied Opto’s 1.6T transceiver business may prove weaker than investors expect.

Meanwhile, AXT remains more speculative. The company supplies InP substrates rather than finished optical products, making it more leveraged to raw material demand but also more volatile.

Key Takeaway When all is said and done, optics may become the next defining AI bottleneck. GPUs grab the headlines, but they cannot operate efficiently without high-speed optical networking tying entire AI clusters together.

Nvidia’s reported request for 20x more supply signals the industry sees years of demand ahead. Yet suppliers agreeing to only 12x tells investors something equally important: management teams still fear overexpansion.

For sharp investors, that creates a balancing act. Companies like Coherent and Lumentum appear positioned to benefit from real infrastructure demand backed by hyperscaler spending. More speculative names such as AXT and Lightwave Logic could deliver larger upside — but with much higher risk if AI spending cools.

In any case, the optics market is no longer a side story in AI. It is becoming the industry’s foundational infrastructure.