Trade Alert: AI Picks & Shovels
Four asymmetric bullish trades across AI connectivity, wireless infrastructure, automation, and synthetic biology.
The AI Buildout Keeps Delivering
Memory stocks pulled back sharply Monday, reviving a familiar question: Did the AI bubble just burst?
Tuesday evening, Aehr Test Systems (AEHR 0.00%↑) supplied another answer.
Aehr’s fiscal fourth-quarter revenue rose 33% year over year, to $18.8 million. Adjusted earnings swung from a loss to $0.11 per share. Quarterly bookings reached a record $60.7 million, while effective backlog climbed to $100.6 million.
The company now expects fiscal 2027 revenue of $130 million to $150 million—growth of roughly 160% to 200%—with demand coming from AI processors, silicon photonics, power semiconductors, and related test and burn-in applications. AEHR jumped nearly 28% after hours, to about $92.
Four Different Read-Throughs
ASML Holding (ASML) supplied an even more forward-looking signal Wednesday morning. The semiconductor-equipment giant reported €9.3 billion in sales and a 54% gross margin, both above guidance, along with €2.9 billion in net income. It guided for third-quarter sales of €11 billion to €12 billion and raised its full-year outlook to €43 billion to €45 billion.
ASML said AI-related investment is causing its customers to accelerate their capacity-expansion plans. It plans to add 30% to both its Low-NA EUV and DUV immersion capacity in 2027, while investigating another 30% increase in 2028. That is an unusually strong read-through from one of the semiconductor industry’s critical chokepoints.
That follows two earlier signals. Micron Technology (MU) reported a blowout quarter and said tight memory supply could persist beyond calendar 2027. Then Penguin Solutions (PENG) reported record quarterly revenue, a 79% increase in adjusted earnings per share, and stronger full-year guidance, driven by demand for memory and AI infrastructure.
Micron sells a critical AI bottleneck. Penguin helps customers assemble and deploy AI infrastructure. Aehr supplies the equipm
ent needed to test and burn in the processors and optical components going into that infrastructure. ASML supplies the lithography equipment needed to manufacture advanced chips in the first place.
Four different parts of the physical stack are pointing in the same direction: the buildout still has legs.
We have successfully traded two of those names before. Our March 19th Top Names combo on ASML produced a 218% profit on premium outlay, or a 72% return on max risk, when we completed the exit in April. We have also made money trading AEHR, and we still have an open trade on it.
The Nvidia Of Biotech
The picks-and-shovels idea also takes us beyond semiconductors.
On Monday, we made two attempts to enter a trade in a previous winner for us, the company one of our Multibaggers analysts has called the “Nvidia of biotech.” Neither order filled.
We’re taking another swing at it today with a revised structure. We’re also adding two Market Watchers trades tied to next-generation communications and physical automation.
Our Top Names trade comes first, because it fits directly into the AI-buildout story above: it is another picks-and-shovels play focused on the high-speed connectivity needed inside data centers.
Today’s Top Names Trade
AI data-center connectivity / semiconductor infrastructure theme
Screen data: RSI 47; Chartmill Technical Rating 9; Chartmill Setup Rating 5; Chartmill Fundamental Rating 6.
