Cohu, Inc. (COHU)

On our desk, the valuation debate around COHU is intensifying following its massive 2026 rally. While the fundamental tailwinds from AI infrastructure, high-bandwidth memory inspection, and the Eclipse handler are undeniable—evidenced by the 150% surge in computing orders and Q2's EPS beat of $0.26—the multiple expansion leaves very little margin for error. We are watching whether the market's 71% positive news sensitivity can sustain these high expectations or if profit-taking will trigger multiple compression.

Looking at the options market and macroeconomic sentiment, COHU's setup into the August 21 options expiration shows a max pain price near 70.00 with call-dominant open interest at the 70 strike. However, with roughly 56% of recent sentiment leaning mildly defensive and an investor comfort level hovering at a neutral 44, caution is warranted. The underlying business is executing well with utilization hitting 80%, but chasing a stock up nearly 200% year-to-date requires strict risk management regarding pipeline conversion.

From a technical and fundamental analysis perspective, evaluating Cohu requires dissecting the quality of their 53% recurring revenue stream alongside the cyclical recovery in IDM utilization. When examining the $1.6 billion serviceable addressable market, analysts must factor in how products like Diamondx, Neon, and PAICe software scale operating leverage. The Q2 gross margin outperformance at 45.5% proves product mix is improving, but maintaining that trajectory depends entirely on sustained adoption in advanced thermal test handlers for AI processors.