Cohu Q3 FY2026 Earnings: AI Compute Demand Drives 37% Revenue Growth

Cohu (NASDAQ: COHU) reported Q3 FY2026 revenue of $173.0 million, up 37% year over year, while GAAP diluted EPS improved to $0.22 from a loss of $0.09. The quarter ended September 26, 2026, also brought a return to GAAP operating profitability, supported by higher systems demand, recurring bookings growth, and increased test-cell utilization.

Core Financial Results

Cohu returned to quarterly profitability as revenue increased by $46.7 million from the prior-year period. GAAP gross margin expanded by approximately 170 basis points, while GAAP operating margin improved from negative 7.7% to positive 7.4%.

Adjusted results also improved, although the gap between GAAP and non-GAAP operating income included $7.2 million of acquired-intangible amortization and $4.6 million of stock-based compensation.

Business and Product Trends

Total bookings increased 126% year over year. Systems bookings rose 318%, while recurring bookings from services, consumables, and software increased 36%, indicating that both equipment demand and the installed-base business contributed to order growth.

Management identified growing adoption of the Eclipse thermal platform for high-performance computing as a major systems-demand driver. Customers are using the platform in response to increasing device complexity, power requirements, and test intensity.

Estimated test-cell utilization reached 82%, up 200 basis points sequentially. Cohu’s annual AI-driven compute opportunity pipeline also expanded 18% sequentially to approximately $1.0 billion as more customer programs moved through qualification and toward production.

Systems-Led Growth Restored Operating Profitability

The revenue increase translated into approximately $23.5 million of additional GAAP gross profit. Meanwhile, research and development expense increased by about $3.1 million and selling, general and administrative expense rose by about $1.0 million, both substantially slower than the 37% revenue growth rate.

Lower purchased-intangible amortization also supported reported profitability, declining to $7.2 million from $10.2 million. Together, higher gross profit, slower expense growth, and lower amortization moved GAAP operating income from a $9.7 million loss to a $12.8 million profit.

Liquidity and Balance Sheet

Cash and investments totaled $507.9 million at quarter-end, up approximately $24.0 million from December 27, 2025. Long-term debt was largely unchanged at $285.2 million, compared with $285.0 million at the end of fiscal 2025.

Accounts receivable increased to $145.2 million from $108.8 million, while inventory rose to $149.0 million from $129.0 million. These increases accompanied the business ramp but also raise the amount of capital committed to receivables and inventory. Cohu did not repurchase shares during the quarter.

Earnings Guidance

Cohu expects Q4 FY2026 revenue to grow 46% year over year. The $178 million midpoint represents an approximately 3% sequential increase from Q3, while the guidance range extends from a slight sequential decline to growth of roughly 7%.

Management said several hundred Eclipse systems are currently forecast for 2027. Cohu is expanding manufacturing capacity and coordinating with supply partners to prepare for potential customer production ramps.

Recent Insider Transactions

The supplied insider data shows 15 sales totaling 197,431 shares and two purchases totaling 7,156 shares over the latest six-month period, resulting in net sales of 190,275 shares. The ten most recent disclosed transactions were all direct sales with a combined value of approximately $9.75 million; the data does not establish the reasons for those transactions.

Risks Investors Need to Watch

• Pipeline conversion: The approximately $1.0 billion AI-driven compute pipeline consists of opportunities progressing through qualification and production stages. The timing and conversion of those programs remain uncertain.
• Manufacturing and supply execution: Meeting the potential demand represented by several hundred Eclipse systems forecast for 2027 will require successful capacity expansion and coordination with suppliers.
• Sequential revenue pace: Although Q4 guidance implies 46% year-over-year growth, its midpoint represents only about 3% sequential growth, and the low end would be below Q3 revenue.
• Working-capital requirements: Receivables and inventory have increased since fiscal year-end. Delayed customer ramps or slower collections could place additional demands on working capital.
• GAAP and adjusted-result differences: Non-GAAP operating results exclude material stock-based compensation and acquired-intangible amortization, making it important to evaluate both reporting measures.

Summary

Cohu’s Q3 FY2026 results showed a return to profitability as systems demand, recurring bookings, and test-cell utilization improved. The central question now is whether the growing AI and high-performance computing pipeline converts into production revenue on schedule while Cohu expands capacity without creating excessive supply-chain or working-capital pressure.