Category: 3. Business

By Christine Ji

Oracle’s massive data-center buildout will require the company to take on new financing strategies – and new risks

Oracle issued $18 billion of debt in September to finance its data-center buildout.

Since Oracle Corp. stunned investors last month with its massive artificial-intelligence pipeline, shares of the company have pulled back from their peak as questions emerge about how the company will afford the massive data-center buildout required for its growth.

Oracle (ORCL) doesn’t yet have the AI infrastructure to fulfill its $455 billion of remaining performance obligations, or the contracted future revenue from signed deals not yet delivered, which is a key concern among investors.

With nearly $6 billion in negative free cash flow over the last four quarters, Oracle is facing questions about how it can afford its AI ambitions. Oracle’s stock was trading at $291.59 on Monday, up 75% year to date but down 16% from its all-time high of $345.72.

Some on Wall Street are optimistic about Oracle’s ability to execute on its contracts. In a note Monday, Mizuho analyst Siti Panigrahi called funding concerns “transitory.” He believes Oracle “can leverage a combination of debt, vendor financing, leasing and creative partnership structures similar to those emerging across the broader AI ecosystem.”

However, Michael Green, portfolio manager and chief strategist at Simplify Asset Management, believes implementing these financing strategies will further push the AI trade into bubble territory. High levels of leverage will create hidden risks that can dramatically worsen if AI demand turns out to be lower than expected, Green told MarketWatch.

Oracle has already been getting “creative” with its financing, according to Baird managing director Ted Mortonson. Last month, the company issued a $18 billion 40-year bond, surprising some on Wall Street with its long duration. Oracle has also increasingly turned to finance leases to fund its data centers in the last year, allowing it to spread out the cost of an asset over its useful life instead of incurring a large upfront cash-flow hit associated with traditional capital expenditures.

Panigrahi also suggested that Oracle could follow a new “blueprint” for the industry by leasing Nvidia Corp.’s (NVDA) graphics processing units instead of purchasing them, referencing a report from The Information about OpenAI’s similar plans.

Also read: Why Oracle’s ‘jumbo’ AI-fueled bond deal is so unusual

While Panigrahi anticipates Oracle’s free cash flow to remain negative in the coming quarters, he sees this trend as “a timing issue rather than a structural concern given the strong visibility from multi-year customer contracts,” pointing out that data centers are monetized “within weeks” once they come online. Panigrahi sees a path for Oracle to cross the trillion-dollar market-capitalization threshold, joining the ranks of infrastructure peers like Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN) and Alphabet Inc. (GOOGL) (GOOG).

However, if demand for AI data centers doesn’t materialize, then Oracle will be on the hook for lease and debt payments that could further eat into its free cash flow, Green pointed out. In this case, these obligations would start hitting Oracle’s balance sheet at a time when the company’s fundamentals are deteriorating from a lack of AI revenue.

The financing questions Oracle faces are hardly unique among the biggest AI players, as more companies add debt to their balance sheets and enter into circular financing agreements.

For example, OpenAI is reportedly considering tapping into debt markets to fund future data-center builds, according to a Reuters report. Additionally, OpenAI’s recent partnership with Advanced Micro Devices Inc. (AMD) gives the company valuable stock warrants that OpenAI could utilize to help pay for more AI hardware.

Panigrahi acknowledged that the prominence of vendor financing could be “inflating valuations” across the AI value chain but said that risk would be mitigated as long as demand from OpenAI, Anthropic, Google, Meta (META) and other model providers remained robust. For Oracle, the stakes are high as it leverages up, and investors will be carefully monitoring its funding plans as it moves forward with its AI buildout.

Representatives from OpenAI and Oracle did not immediately respond to requests for comment.

Read on: AMD’s stock soars toward its best day in 9 years. Here’s why OpenAI wants a stake.

-Christine Ji

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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  10-06-25 1704ET
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A Huge Lesson

One year ago, EU member states agreed to impose tariffs on electric vehicle (EV) imports from China in a landmark trade case that was hailed (including on these pages) as a victory for the bloc and its efforts to shield the European car industry from unfair Chinese competition. But only 12 months later, the anti-subsidy case has come to be seen in Brussels and other capitals as a cautionary tale rather than a triumph of European trade policy. The EV saga dragged on for a full year, left the EU divided, and ended up penalizing European carmakers as much as it did their Chinese competitors. The tariffs that the Commission imposed are unlikely to prevent Chinese EV producers such as BYD from profitably exporting cars to the EU. Despite that, they triggered a robust response from Beijing, which launched a series of retaliatory trade cases targeting European cognac, pork, and dairy.

Had the European Commission’s EV case collapsed in the face of pressure from Beijing and Berlin, the damage would have been far worse. Still, it is hard to argue today that the benefits from this hard-fought case have outweighed the costs. Instead, the saga exposed the flaws in Europe’s approach to trade defense. In a world where China and the United States are moving fast and hitting hard, the EU has been too slow, too timid, and too wedded to a rulebook the others have torn up. “We have developed a lot of instruments that are very narrow, very technical and that take a long time to deploy,” a senior European diplomat told me. “Going forward, we will need to go much harder in Brussels.” The view is shared by people at the top of the Commission who worked on the EV case. “It has been a huge lesson for us,” a senior EU official said. “We have been operating within the rules, and it hasn’t made a dent. There is no benefit to our measured approach, to being a slightly kinder version of the United States.”

Fever Pitch

This realization is dawning at a time when the alarm bells over Chinese overcapacities are reaching fever pitch. Some officials now acknowledge that the policies of past years, which were focused on leveling the economic playing field with China and securing better market access there, may have led Europe down a dead-end road. The EU’s policy of de-risking, which dates to a March 2023 speech by European Commission President Ursula von der Leyen, has yielded few, if any, results. In terms of trade, the EU is more dependent on China now than it was when the speech was given two and a half years ago. There is now an urgent need to course-correct, but the path forward is unclear. “We are in the process of rethinking our China strategy,” said a senior EU trade official.

There are many measures in the pipeline, but there is also a nagging fear that they may not be enough. This week, the Commission will present a proposal to shield the European steel industry once its safeguards expire in mid-2026. The plan foresees a near-halving of import quotas and a doubling of tariffs to 50% on imports not covered by the quotas. It is the closest the EU has veered toward blunt Trumpian protectionism. Other trade cases loom as a growing list of industries, from machine tools to chemicals, clamor for protection. Support for “Made in Europe” rules is gaining momentum, despite concerns that they risk penalizing partners such as Japan as much as they would China. Local content requirements are expected to feature prominently in a new Commission proposal for public procurement. “I would rather see the EU including partners, but the pressure to move to a local content approach is very strong,” the senior EU trade official said. The idea of building a like-minded anti-China trading bloc that includes Japan, South Korea, Canada, Australia, and the UK—but not the United States—is dismissed by EU officials as unworkable.

A Yawning Gap

The EU is also preparing an “industrial accelerator act” by the end of the year that will attempt to tackle the thorny question of FDI conditionality: ensuring that greenfield investments from China are more than tariff-dodging assembly plants, with little added value for Europe in terms of jobs and know-how. Whether the Commission will get buy-in from European member states, which have the power to set investment policy themselves, is unclear. “They will simply have to get on board,” one EU official explained to me when prodded. A country such as Spain may see it differently. Prime Minister Pedro Sanchez’s government seems eager to attract Chinese investment regardless of the conditions—and even if it means luring production away from other EU countries by presenting Madrid as an uncritical friend of Beijing. As it is contemplating with Hungary, the Commission will need to ensure that Spain’s beggar-thy-neighbor policies do not go unchecked.

But Spain may be the tip of a European iceberg. At a time when Brussels is contemplating much bolder steps against China, a yawning gap is opening up with other European capitals that are either reluctant to confront Beijing, are consumed by other pressing political, economic and security priorities, or are still holding out hope that China might be part of the solution. President Emmanuel Macron, I am told, is considering bringing the Chinese into a discussion on global imbalances as part of France’s G7 presidency next year. As US President Donald Trump pivots to a more transactional approach with Beijing, a discussion is swirling about whether the Dutch government (and Europe in general) should be doing more to promote industrial crown jewels such as ASML instead of restricting their business with China.

Total Inertia

The five-month-old German government is also turning its attention to China, though it is unclear whether its policies will match a more critical tone. We will have a better picture when Foreign Minister Johann Wadephul makes his first trip to Beijing at the end of October. Chancellor Friedrich Merz has yet to pin down the timing of what he had hoped would be a two-stop trip this year to Delhi and Beijing. Officials say he is now considering splitting up the trips and could be forced to push his China visit into next year. Trouble in free trade talks between Brussels and Delhi, which resume this week, may be complicating the timing of an India trip. The EU has said it wants to conclude a deal by the end of the year, but exasperation with the hard line taken by India’s Commerce Minister Piyush Goyal is rising as the deadline nears. “At the moment, we are having trouble seeing that the deal on the table would be good for our companies,” the senior EU trade official said. A Brussels-based industry source who is privy to the talks added: “If we get an agreement with India, it will be a very shallow one.”

Another source of concern in Berlin is the state of total inertia in the Federal Ministry of Economic Affairs and Energy (BMWE). Officials have promised to produce a national economic security strategy by the end of the year, but that deadline now looks impossible to meet. Minister Katherina Reiche has been sitting on an internal proposal for how to tackle the strategy since before the summer, I was told by several officials, meaning that real work on it has not even begun. “There is no way it will be done by the end of the year,” one official told me. “Reiche’s ministry is stepping on the brakes at every turn.” Another noted that economic security was not in the DNA of the officials running the ministry.

Light Speed

It is a similar story with the €1 billion critical raw materials fund that the German government launched one year ago. One might have expected that China’s export controls on rare earth magnets, which sent German industry into a panic in the spring, would have supercharged Berlin’s push to reduce its dependencies. But a year after the fund was set up, not a single project has been approved, despite roughly 40 applications that have been submitted to state bank KfW. A paltry €13 million of government support made it into the 2025 budget. And the economy and finance ministries are sparring over who will set aside funds for critical mineral projects in the 2026 budget, which is due to be approved next month.

The president of the German Federation of Industries (BDI) wrote to Reiche before the summer expressing concern about the rare earths situation, but has yet to receive a response. Reiche is already being likened to Christine Lambrecht, the former defense minister who was forced out after only a year in office because of her bungled response to Russia’s full-scale invasion of Ukraine. “This is an absolutely critical time,” another German official told me. “We don’t have one to two years for the new minister to move up the learning curve. The geopolitical shifts are happening at light speed, and we are still moving at the same old slow pace.”

In a Financial Times column on Sunday, the market veteran pointed out that the “immigration boom-bust cycle” that the U.S. is experiencing now is unprecedented in scale, swinging from a net gain of more than 3 million in 2023 to an expected trickle of just 400,000 this year. The drastic throttling in the labor force could slash U.S. growth potential by more than 20%.

“Yet increasingly the response to this risk too is a shrug. AI is going to make human labor less necessary anyway,” Sharma quipped.

Meanwhile, the U.S. debt-to-GDP ratio is already at 100% and expected to continue galloping higher, topping the World War II-era record high in the coming years.

But again, AI could come to the rescue by propelling economic growth enough to stabilize the debt. The global bond market even appears to be pricing in that scenario, Sharma said, pointing to surging yields for Japan, France and the U.K., even though they have smaller budget deficits than the U.S. does.

“The main reason AI is regarded as a magic fix for so many different threats is that it is expected to deliver a significant boost to productivity growth, especially in the US,” he added.

In addition to the workforce and debt woes, AI could even ease inflation risks, including tariff-driven pressure, by enabling companies to raise wages but still keep prices steady, Sharma said.

The hoped-for benefits of a productivity boom aren’t totally far-fetched. The Congressional Budget Office estimated earlier this year that booting productivity growth by 0.5 percentage point each year for 30 years could make publicly held debt 113% of GDP by 2055, instead of 156%.

And the U.S. has in fact enjoyed more productivity growth in recent years than other developed economies have, stoking further hype among investors that the lead will widen.

America’s AI narrative has helped global investors overcome the shock of President Donald Trump’s trade war and “Liberation Day” tariffs, which triggered a sudden exodus out of U.S. markets. But the money quickly came back, and Sharma said foreigners plowed $290 billion into U.S. stocks in the second quarter and now own 30% of the market.

“In a way, then, America has become one big bet on AI,” he said. 

Excluding AI-related stocks, European markets have actually been beating the U.S. this decade, and the outperformance is spreading to other sectors.

“What that suggests is that AI better deliver for the US, or its economy and markets will lose the one leg they are now standing on,” Sharma warned. 

He’s not the only voice sounding the alarm. Lisa Shalett, Chief Investment Officer for Morgan Stanley Wealth Management, wrote on September 29 that “it’s hard not to still see … a boom driven by a one-note narrative.” Since ChatGPT’s launch, Shalett noted, what she considers “AI data center-ecosystem stocks” have accounted for roughly 75% of S&P 500 returns, 80% of earnings growth and 90% of capex growth. “It’s difficult to ignore the market’s reliance on AI capex,” she concluded.

For now, Wall Street seems happy to ride the wave. On Monday, OpenAI’s announcement that it’s taking a stake in chipmaker AMD sparked another stock market rally.

Analysts are also hiking price targets for other hot AI plays like Nvidia as well as the overall S&P 500. And while the recent string of record highs has fueled concerns about a bubble, certain metrics indicate that the AI boom isn’t yet at dotcom-bust levels.

Others still see conditions getting frothier. Evercore ISI analyst Julian Emanuel said in a note on Monday that he now sees 30% odds of the S&P 500 soaring to 9,000 at the end of next year in a “bubble scenario,” up from 25% odds just a few weeks ago. His base case is for the index to reach 7,750 by then, representing a gain of 15% from currently levels.

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INDIANAPOLIS, Oct. 6, 2025 /PRNewswire/ — Allison Transmission is proud to announce its 4500 Rugged Duty Series (RDS) fully automatic transmission has been successfully integrated with the Cummins X15N natural gas engine in Kenworth T880 tractors. The pairing sets a new standard for sustainable heavy-duty transportation, delivering exceptional power and innovative technology.

Ozinga Renewable Energy Logistics has successfully deployed the Cummins X15N engine paired with the Allison 4500 RDS transmission, demonstrating how sustainability and operational excellence can go hand in hand. As an early adopter of natural gas-powered vehicles, Ozinga continues to validate emerging technologies that reduce emissions and enhance fleet performance.

“The lighter weight of the X15N engine, combined with the optimized performance of the 4500RDS transmission, not only enhances efficiency and performance but also increases payload capacity, reducing our total cost of vehicle ownership while supporting our sustainability objectives,” said Brian Erickson, Director of Transportation, Ozinga Energy.

“The X15N features a broader torque curve, providing better low-end torque and improved drivability, particularly in challenging conditions such as hill climbing,” said David King, Product Manager of Natural Engines, Cummins. “Additionally, the X15N is inherently lower in NOx emissions compared to diesel engines and when using renewable natural gas, it can achieve a negative carbon footprint, aligning well with customer demands for cleaner fuel alternatives.”

The successful integration of Cummins and Allison technologies demonstrates how industries can adopt cleaner fuel solutions without compromising on performance. This achievement leverages the advanced capabilities of the Cummins X15N engine, with its 500 horsepower and 1850 pounds per foot of torque, and the proven performance of the Allison 4500 RDS transmission.

“The Allison 4500 RDS transmission delivers the proven reliability and durability required to handle the tough duty cycles and demanding delivery schedules in heavy duty tractor and vocational truck applications. This partnership showcases Allison’s dedication to ensuring our product seamlessly integrates with the latest technological advancements and helping customers achieve their efficiency and sustainability goals,” said Rohan Barua, Vice President, North America Sales, Global Channel and Aftermarket, Allison Transmission.

Allison transmissions pair with all propulsion solutions, including diesel, electric or natural gas. This provides customers with the power of choice in selecting the energy source that best suits their needs. In addition to the Kenworth T880, the Kenworth L770, Peterbilt 567 and 520 can all be ordered with the Allison 4500 and Cummins X15N combination.

For more information on Allison Transmission’s fuel-agnostic solutions, visit AllisonTransmission.com.

About Allison Transmission
Allison Transmission (NYSE: ALSN) is a leading designer and manufacturer of propulsion solutions for commercial and defense vehicles and the largest global manufacturer of medium- and heavy-duty fully automatic transmissions that Improve the Way the World Works. Allison products are used in a wide variety of applications, including on-highway vehicles (distribution, refuse, construction, fire and emergency), buses (school, transit and coach), motorhomes, off-highway vehicles and equipment (energy, mining, construction and agriculture) and defense vehicles (tactical wheeled and tracked). Founded in 1915, the company is headquartered in Indianapolis, Indiana, USA. With a presence in more than 150 countries, Allison has regional headquarters in the Netherlands, China and Brazil, manufacturing facilities in the USA, Hungary and India, as well as global engineering resources, including electrification engineering centers in Indianapolis, Indiana, Auburn Hills, Michigan and London in the United Kingdom. Allison also has approximately 1,600 independent distributor and dealer locations worldwide. For more information, visit allisontransmission.com.

SOURCE Allison Transmission, Inc.

Fremont, CA (October 6, 2025) – Aehr Test Systems (NASDAQ: AEHR), a worldwide supplier of semiconductor test and burn-in equipment, today announced financial results for its first quarter of fiscal 2026 ended August 29, 2025.

Fiscal First Quarter Financial Results:

• Net revenue was $11.0 million, compared to $13.1 million in the first quarter of fiscal 2025.
• GAAP net loss was $(2.1) million, or $(0.07) per diluted share, compared to GAAP net income of $0.7 million, or $0.02 per diluted share, in the first quarter of fiscal 2025.
• Non-GAAP net income, which excludes stock-based compensation, acquisition-related adjustments and restructuring charges, was $0.2 million, or $0.01 per diluted share, compared to non-GAAP net income of $2.2 million, or $0.07 per diluted share, in the first quarter of fiscal 2025.
• Bookings were $11.4 million for the quarter.
• Backlog as of August 29, 2025 was $15.5 Effective backlog, including bookings since August 29, 2025, is $17.5 million.
• Total cash, cash equivalents and restricted cash as of August 29, 2025 was $24.7 million, compared to $26.5 million at May 30, 2025.

An explanation of the use of non-GAAP financial measures and a reconciliation of Aehr’s non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the accompanying tables.

Gayn Erickson, President and CEO of Aehr Test Systems, commented:

“We are pleased with the start to this fiscal year, with revenues across several market segments and momentum in sales and customer engagements in both wafer level and packaged part test and burn-in of artificial intelligence (AI) processors. While we had not provided guidance for the quarter, we did finish ahead of the street consensus estimates for both revenue and our bottom line.

“Momentum in packaged part qualification and production burn-in for AI processors continued to drive growth in our new Sonoma ultra-high-power packaged part burn-in systems and consumables. During the quarter, our lead production customer, a world-leading hyperscaler, placed multiple follow-on volume production orders for Sonoma systems and requested shorter lead times to support higher-than-expected volumes as they ramp up development of their own advanced AI processors. This customer has already outlined plans to expand capacity for this device and introduce new AI processors over the coming year to be tested and burned in on our Sonoma platform at one of the world’s leading test houses. We are also collaborating with them on future generations of processors to ensure we can meet their long-term production needs for both package and even wafer level burn-in.

“Since the acquisition of Incal Technology last year, Aehr has introduced several enhancements to the Sonoma system to address both qualification and production test and burn-in requirements across a broad range of AI processor suppliers, test labs, and Outsourced Assembly and Test Houses (OSATs). Key upgrades include expanding power-per-device to 2000W, increased parallelism, and full automation with an integrated package device handler. Over just the last quarter, including an open house held recently at our headquarters in Fremont, California, we have had 10 companies visit Aehr to review our Sonoma system and its new enhancements, including a fully automated device handler that we have installed at our Fremont facility. Customer feedback on these enhancements and the device handler has been very positive, and we anticipate these new features to drive new applications and orders this fiscal year. Our acquisition of Incal Technology has provided us with intimate visibility into the long-term needs of a large number of leading AI processor companies.

“This past year, we delivered the world’s first production wafer level burn-in (WLBI) systems for AI processors. Importantly, these systems are installed at one of the premier global OSATs, creating a highly visible showcase to other potential AI customers and strengthening our position in the market. We expect follow-on orders from this cutting-edge AI customer as volumes increase, and other AI processor suppliers have already approached us about the feasibility of WLBI for their devices.

“We are also developing a strategic partnership with this world’s leading OSAT to provide advanced wafer level test and burn-in solutions for high-performance computing (HPC) and AI processors. This joint solution, already in operation at their facility, marks a significant milestone for the industry. By combining Aehr’s technological leadership with this OSAT’s global reach we can showcase our unique capabilities to the world. This model offers a complete turnkey solution from design to high-volume production, and several customers have already visited Aehr to see these systems in action.

“Additionally, we launched a benchmark evaluation program with a top tier AI processor supplier to validate our FOX-XP^TM production systems for WLBI and functional test of their high-performance, high-power AI processors. This paid evaluation, which includes a custom high-power WaferPak^TM and development of a production WLBI test program, is a significant step toward adoption of WLBI as an alternative to later-stage burn-in and into future generations of their products.

“Beyond AI processors, we are seeing signs of increasing demand across the other segments we serve, including silicon photonics, hard disk drives, gallium nitride, and silicon carbide. For silicon photonics, we upgraded another one of our major silicon photonics customer’s FOX-XPs to the new higher-power configuration this quarter, doubling their device test parallelism with up to 3.5kW power per wafer in a nine-wafer configuration. This latest system shipment includes our fully integrated and automated WaferPak Aligner configured for single touchdown test and burn in of all devices on their 300mm wafers.  We expect additional orders and shipments this fiscal year to meet their production capacity needs for wafer level test and burn-in of their optical I/O silicon photonics integrated circuits. In hard disk drives, AI-driven applications are generating unprecedented amounts of data, creating new demand for our WLBI systems, with our lead production customer that is one of the world’s top storage suppliers already planning additional purchases. Gallium nitride devices are increasingly being used for data center power efficiency, automotive systems, and electrical infrastructure, with multiple new engagements underway. Moreover, although silicon carbide growth is expected to be weighted toward the second half of the year, we continue to see opportunities for upgrades, WaferPaks, and capacity expansion as that market rebounds.

“The rapid advancement of generative AI and the accelerating electrification of transportation and global infrastructure represent two of the most significant macro-trends impacting the semiconductor industry today. These transformative forces are driving enormous growth in semiconductor demand while fundamentally increasing the performance, reliability, safety, and security requirements of the devices used across computing and data infrastructure, telecommunications networks, hard disk drive and solid-state storage solutions, electric vehicles, charging systems, and renewable energy generation.

“As these applications operate at ever-higher power levels and in increasingly mission-critical environments, the need for comprehensive test and burn-in has become more essential than ever. Semiconductor manufacturers are turning to advanced wafer level and package level burn-in systems to screen for early-life failures, validate long-term reliability, and ensure consistent performance under extreme electrical and thermal stress. This growing emphasis on reliability testing reflects a fundamental shift in the industry – from simply achieving functionality to guaranteeing dependable operation throughout a product’s lifetime, a requirement that continues to expand alongside the scale and complexity of next-generation semiconductor devices.

“We are excited about the year ahead and believe nearly all our served markets will see order growth in the fiscal year, with silicon carbide growth expected to strengthen further into fiscal 2027. Although we remain cautious due to ongoing tariff-related uncertainty and are not yet reinstating formal guidance, we are confident in the broad-based growth opportunities ahead across AI and our other markets.”

Management Conference Call and Webcast:

Aehr Test Systems will host a conference call and webcast today at 5:00 p.m. Eastern (2:00 p.m. PT) to discuss its fiscal 2026 first quarter operating results. To access the live call, dial +1 888-506-0062 (US and Canada) or +1 973-528-0011 (International) and give the participant passcode 304180. In addition, a live and archived webcast of the conference call will be available over the Internet at www.aehr.com in the Investor Relations section and may also be accessed by clicking here. A phone replay of the call will be available approximately two hours following the end of the live call and will remain available for one week. To access the call replay, dial +1 877-481-4010 (US and Canada) or +1 919-882-2331 (International) and enter replay passcode 52949.

About Aehr Test Systems

Headquartered in Fremont, California, Aehr Test Systems is a leading provider of test solutions for testing, burning-in, and stabilizing semiconductor devices in wafer level, singulated die, and packaged part form, and has installed thousands of systems worldwide. Increasing quality, reliability, safety, and security needs of semiconductors used across multiple applications, including electric vehicles, electric vehicle charging infrastructure, solar and wind power, computing, advanced artificial intelligence (AI) processors, data and telecommunications infrastructure, and solid-state memory and storage, are driving additional test requirements, incremental capacity needs, and new opportunities for Aehr’s products and solutions. Aehr has developed and introduced several innovative products including the FOX-P^TM families of test and burn-in systems and FOX WaferPak^TM Aligner, FOX WaferPak Contactor, FOX DiePak^® Carrier and FOX DiePak Loader. The FOX-XP and FOX-NP systems are full-wafer contact and singulated die/module test and burn-in systems that can test, burn-in, and stabilize a wide range of devices such as leading-edge silicon carbide-based and other power semiconductors, 2D and 3D sensors used in mobile phones, tablets, and other computing devices, memory semiconductors, processors, microcontrollers, systems-on-a-chip, and photonics and integrated optical devices. The FOX-CP system is a low-cost single-wafer compact test solution for logic, memory and photonic devices and the newest addition to the FOX-P product family. The FOX WaferPak Contactor contains a unique full-wafer contactor capable of testing wafers up to 300mm that enables IC manufacturers to perform test, burn-in, and stabilization of full wafers on the FOX-P systems. The FOX DiePak Carrier allows testing, burning in, and stabilization of singulated bare die and modules up to 1024 devices in parallel per DiePak on the FOX-NP and FOX-XP systems up to nine DiePaks at a time. Acquired through its acquisition of Incal Technology, Inc., Aehr’s new line of high-power packaged part reliability/burn-in test solutions for AI semiconductor manufacturers, including its ultra-high-power Sonoma family of test solutions for AI accelerators, GPUs, and high-performance computing (HPC) processors, position Aehr within the rapidly growing AI market as a turnkey provider of reliability and testing that span from engineering to high volume production. For more information, please visit Aehr Test Systems’ website at www.aehr.com.

Safe Harbor Statement

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or Aehr’s future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “going to,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these words or other similar terms or expressions that concern Aehr’s expectations, strategy, priorities, plans, or intentions. Forward-looking statements in this press release include, but are not limited to, future requirements and orders of Aehr’s new and existing customers; future applications and orders for the AI processors, test solutions for AI semiconductor manufacturers and the Sonoma system; bookings and revenue forecasted for proprietary WaferPak^TM and DiePak consumables, as well as the ability to generate bookings and revenue from application of Aehr’s solutions in emerging markets; Aehr’s ability to receive orders and generate revenue in the future, as well as Aehr’s beliefs regarding the factors impacting the foregoing; expectations related to long-term demand for Aehr’s products; expectations regarding current and future partnerships; expectations regarding industry demand as a whole and smaller segments within it; the attractiveness of key markets and the ability for Aehr to successfully enter new markets. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Aehr’s recent Form 10-K, 10-Q and other reports filed from time to time with the Securities and Exchange Commission. Aehr disclaims any obligation to update information contained in any forward-looking statement to reflect events or circumstances occurring after the date of this press release.

1. Represents compensation expense for equity awards granted to employees and directors.
2. Represents amortization of acquired intangible assets and accretion expense of escrow payable.
3. Represents employee termination benefits, impairment of long-lived assets that will no longer be used in operations, contract termination costs and facility exit-related costs.
4. Represents acquisition activity costs.

Non-GAAP measures should not be considered a replacement for GAAP results. The non-GAAP measures indicated above are financial measures the Company uses to evaluate the underlying results and operating performance of the business. The limitation of these measures are that they exclude items that impact the Company’s current period GAAP measures. This limitation is best addressed by using these measures in combination with the most directly comparable GAAP financial measures. These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies.

We believe these measures enhance investors’ ability to review the Company’s business from the same perspective as the Company’s management and facilitate comparisons of this period’s results with prior periods.

(1) Includes restricted cash within prepaid expenses and other current assets.

Contacts:
Aehr Test Systems Chris Siu Chief Financial Officer csiu@aehr.com	PondelWilkinson, Inc. Todd Kehrli or Jim Byers Investor Contact tkehrli@pondel.com jbyers@pondel.com

Treatment with BTK inhibitors in patients with chronic lymphocytic leukemia (CLL) harboring NOTCH1 mutations was associated with significantly longer progression-free survival (PFS) compared with chemoimmunotherapy, according to findings from a retrospective analysis published in eJHaem.¹

In the NOTCH1-mutated subgroup, the median PFS was not reached with BTK inhibitor treatment compared with 50.6 months with chemoimmunotherapy (HR, 10.86; 95% CI, 1.37-85.88; P = .005). However, no significant difference in overall survival was observed between the arms (P = .22).

These findings suggest that BTK inhibitor therapy may mitigate the adverse prognostic effect of NOTCH1 mutations in CLL. Similar observations were previously reported in the randomized phase 3 RESONATE trial (NCT01578707), in which patients with NOTCH1-mutated disease experienced inferior PFS with ofatumumab (Kesimpta) compared with ibrutinib (Imbruvica).² Preclinical data also indicate that BTK inhibition reduces NOTCH1 activation through disruption of B-cell receptor/NOTCH1 crosstalk, providing a biological rationale for the observed clinical benefit.³

Retrospective Study of the Effects of NOTCH1 Mutation Status on Treatment Efficacy in CLL: Key Points

• Treatment with BTK inhibitors resulted in a significantly longer median PFSin patients with CLL harboring NOTCH1 mutations compared with treatment with chemoimmunotherapy.

• These findings suggest that BTK inhibitor therapy may mitigate the adverse prognostic effect of NOTCH1 mutations in CLL, possibly by disrupting B-cell receptor/NOTCH1 crosstalk.

• The study highlights the potential value of screening for NOTCH1 mutations to identify patients with CLL who may benefit from BTK inhibitor treatment.

In contrast, among patients without NOTCH1 mutations, the retrospective analysis showed no significant difference in PFS between those treated with BTK inhibitors vs chemoimmunotherapy (P = .51).¹ In the BTK inhibitor–treated population, the estimated 2-year PFS rates were 94% for patients with NOTCH1 mutations vs 84% for those without NOTCH1 mutations (P = .12). No significant survival differences were observed between subgroups with mutated vs unmutated disease treated with chemoimmunotherapy (P = .14). These findings are consistent with prior data from studies like the phase 3 LRF CLL4 trial (NCT58585610) and an analysis of the predictive value of NOTCH1 mutations, which both identified NOTCH1 mutations as independent adverse prognostic markers in the context of chemoimmunotherapy in patients with CLL.

“In addition to routine TP53 and IGHV mutation status, our study highlights the potential value of screening for NOTCH1 mutations to identify patients who may benefit from BTK inhibitor treatment,” lead study author Clémence Haméon, MD, of the Hematology and Cell Therapy Department of Tours University Hospital at Tours Centre Val de Loire in France, and coauthors wrote in the paper. “The [effect] of NOTCH1 mutations on combination therapies, such as obinutuzumab [(Gazyva) plus] venetoclax [Venclexta] or venetoclax [plus a] BTK inhibitor, is yet to be determined.”

Among 229 eligible patients screened, 174 were included in the analysis. The median age at diagnosis was 63 years, and the median follow-up duration was 84.1 months. At baseline, most patients presented with early-stage disease, with 66.1% of patients classified as having Binet stage A disease, 25.3% of patients classified with stage B disease, and 8.6% of patients classified with stage C disease.

Regarding immunogenetic features, 84 patients (48.3%) had unmutated IGHV, 62 patients (35.6%) had mutated IGHV, and 28 patients (16.1%) had unknown IGHV mutational status. A complex karyotype was identified in 34 of 170 evaluable patients (20%). Fluorescence in situ hybridization analysis demonstrated 17p deletions in 6.0% of 168 evaluable patients and 11q deletions in 12.4% of 169 evaluable patients.

NOTCH1 mutations were detected in 25.9% of all patients prior to initiation of first-line therapy. The most frequent alteration was a c.7541_7542 deletion in exon 34, observed in 64.4% of NOTCH1-mutated cases. Patients with a NOTCH1 mutation were more likely to be older than 65 years and to harbor unmutated IGHV, with statistically significant associations observed for both factors (P = .007 and P = .002, respectively). No significant associations were identified between NOTCH1 mutation status and gender, Binet stage, complex karyotype, or TP53 mutation status.

The median time from diagnosis to first treatment was shorter in patients with a NOTCH1 mutation compared with those without (21.75 months vs 45.9 months, respectively; P = .06).

First-line treatment patterns among patients with NOTCH1 mutations were diverse. Chemoimmunotherapy was administered to 15 patients, most commonly fludarabine plus cyclophosphamide and rituximab (Rituxan; n = 8), followed by bendamustine plus rituximab (n = 5) and dexamethasone plus rituximab and cyclophosphamide (n = 2). A total of 18 patients received BTK inhibitors, including ibrutinib (n = 10) and acalabrutinib (Calquence; n = 8). Additional therapies included obinutuzumab plus venetoclax (n = 2), chloraminophene (n = 3), acalabrutinib (n = 3), venetoclax monotherapy (n = 2), and other regimens (n = 2).

References

1. Haméon C, Houot R, Gyan E, et al. NOTCH1 mutation is associated with response to Bruton tyrosine kinase inhibitors in chronic lymphocytic leukemia: a retrospective study. eJHaem. 2025;6(5). doi:10.1002/jha2.70146
2. Munir T, Brown JR, O’Brien S, et al. Final analysis from RESONATE: up to six years of follow-up on ibrutinib in patients with previously treated chronic lymphocytic leukemia or small lymphocytic lymphoma. Am J Hematol. 2019;94(12):1353-1363. doi:10.1002/ajh.25638
3. Del Papa B, Baldoni S, Dorillo E, et al. Decreased NOTCH1 activation correlates with response to ibrutinib in chronic lymphocytic leukemia. Clin Cancer Res. 2019;25(24):7540-7553. doi:10.1158/1078-0432.CCR-19-1009