Is COHU Stock Still Worth Buying After Its Big 2026 Rally?

Cohu, Inc. COHU has moved from a recovery candidate to a high-expectation semiconductor equipment stock. After a sharp 2026 rally, the debate is less about whether demand is improving and more about how much of that improvement is already reflected in the share price.The stock still has support from AI, high-performance computing and improving order trends. Yet profitability remains early in its recovery, and valuation now leaves less room for execution errors.COHU Has Momentum but Not a Clean StoryCOHU shares have surged 195.5% year to date and 236.2% over the past 12 months. That move reflects a better order backdrop, higher semiconductor test utilization and stronger confidence in AI-related demand.COHU One-Year Price Return PerformanceImage Source: Zacks Investment ResearchThe operating story, however, is still rebuilding. Cohu is benefiting from higher customer engagement in AI compute, HBM inspection and power-management test, but the company is recovering from a weak 2025 earnings base rather than compounding from already-strong profitability.Teradyne, Inc. TER is a useful comparison because it also serves semiconductor and electronics testing markets. Teradyne designs and manufactures automated test equipment, making it relevant for investors evaluating the broader chip-test cycle.Advantest Corporation ATEYY is another relevant benchmark in semiconductor test equipment. Its products include SoC, power-device and memory test systems, which overlap with several demand areas influencing Cohu’s opportunity set.Cohu Revenue Growth Looks Better Than EarningsFirst-quarter 2026 revenues increased 29.3% year over year to $125.1 million, while non-GAAP gross margin improved to 46.5%. The quarter also benefited from stronger orders and estimated test-cell utilization of 78%.Earnings were less convincing. Cohu reported non-GAAP earnings per share of a penny, missing expectations, while operating expenses remained elevated as the company increased investments to support high-performance computing opportunities.The annual earnings picture also argues for patience. EPS was negative in 2025 at 22 cents per share, and the 2026 estimate calls for a recovery to 60 cents. That is progress, but not enough to make the earnings case look fully de-risked.COHU Valuation Leaves Less Room for ErrorValuation is the main reason to be more measured after the rally. COHU trades at 5.29X forward 12-month sales, above the Zacks Electronics - Manufacturing Machinery industry’s 4.42X and well above its own five-year median of 2.20X.COHU Forward 12-Month P/S RatioImage Source: Zacks Investment ResearchThat premium may be justified if AI and HPC demand converts into sustained revenue growth. Still, a richer sales multiple increases the penalty if customer qualifications, order timing or margin recovery disappoint.The valuation signal is also visible in the price target. The $78 target sits only modestly above the $69.11 stock price as of July 1, 2026, suggesting upside exists but is no longer wide after the rally.Cohu Balance Sheet Supports the Bull CaseCohu’s balance sheet remains a clear support for the bullish argument. The company ended the first quarter of 2026 with $488.7 million in cash and investments.That financial flexibility matters because the recovery depends on sustained product development and customer qualifications. With roughly $305 million of total debt, Cohu has room to fund R&D, production capacity and software development while waiting for broader semiconductor demand to scale.How COHU Screens for Investors NowThe bottom line is that COHU still offers upside tied to AI compute, HBM inspection and a cyclical recovery, but the stock no longer looks inexpensive. The rally has made execution and valuation discipline more important.COHU currently carries a Zacks Rank #2 (Buy), indicating supportive near-term earnings estimate trends. That helps keep the stock on investors’ watchlists, especially while orders and revenue are improving. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Style Scores are more mixed. COHU has a Growth Score of B, but its Value Score of F, Momentum Score of F and VGM Score of F point to an uneven overall setup. For investors, that combination supports a selective stance: the recovery story is real, but valuation and execution risks argue against chasing the stock without caution.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks