AEM share price to explode in 2026?
As semiconductor titans like Nvidia and Micron continue their historic “giga cycle” through 2025, a critical debate has emerged: is the AI infrastructure boom a sustainable frontier or a bubble primed to burst? And what will be the implications for AEM share price in 2026?
With Big Tech funneling hundreds of billions into data centers, the stakes have never been higher for secondary players. For AEM Holdings, a leader in “Test Cell Solutions 2.0,” the coming year represents a pivotal inflection point. As chip complexity hits a fever pitch, we examine whether AEM is positioned to ride the next wave of AI growth or if it’s drifting toward a market correction.
Generative AI should be the most transformative technology since the invention of Internet. Even at its nascent stage, AI has already driven thousands of job cuts worldwide due to AI adoption across global companies. The general belief is that AI could replace many jobs and presents an attractive cost-cutting measure for many firms. Thus, the demand for AI will likely to continue surging in the short term.
Against the backdrop of the shift to AI technology, Micron Technology, one of the top 3 memory chipmakers, has delivered a stellar result for Q1 FY2026, with revenue surging to US$13.6 billion and income at US$6.2 billion. In fact, Micron has announced that it’ has sold out it’s entire production of High Bandwidth Memory (HBM) chips for 2026. This is the same for Samsung and Hynix. Memory chips are used to store and process data in electronic devices. Collectively, the three companies hold monopoly over the memory chip market. The global explosive demand for HBM is largely due to massive demands for AI chips in data centers as Big Tech scramble to develop the AI infrastructure.
The solid financial performance of Micron came as the chipmaker is building a $9.5 billion HBM plant in Singapore. The plant is expected to start operations in 2026. Given that AEM is based in Singapore, it would make economic sense for Micron to procure the backend test equipment from AEM and install them in the Singapore production facility.
AEM share price in scary chapter
AEM share price in new chapter with Temasek
AEM’s thermal control technology used in its System Level Test products is essential for AI chips deployed in AI data centers. Furthermore, AEM has previously shared in the 3QFY2025 financial report that new customer ramp was underway and that revenue from a “major AI/HPC customer” is expected to grow significantly in FY2026. In this context, 2026 could be a transformative year for AEM as it rides the AI boom.
Apparently, the management is of the view that AEM share price is undervalued as the management conducted a series of shares buybacks in December. As at 18 December 2025, 1.2 million of shares were bought back from the market.
In this blog, I have always maintained that on its day, AEM share price can be unbeatable. Conversely, when the tide goes against AEM share price, the counter can spiral out of control. On this note, this counter is really not for the faint-hearted. Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. I am vested in this counter, so my views on AEM share price may be biased.
AEM share price in whole new world
Due to the boom and bust nature of the semiconductor industry, AEM share price is historically volatile. However, the current bear cycle of AEM share price stems largely from a crisis of confidence due to a series of missteps which included operational mistake in the transition to a new Enterprise Resource Planning (ERP) system, the lawsuit with Advantest and lack of business diversification.
Out of these troubles, the one that really impacted AEM the most is the over-reliance on Intel for business. To address this, the past three years saw AEM doubling down its R&D efforts as part of the roadmap to gain new customers through innovate product offerings.
In 2024, AEM secured numerous key patents that further solidify its leadership in multizone thermal control, wafer probe control, and high-speed automation technologies. Notably, it has successful demonstrated its Z-Series’ advanced thermal and automation capabilities to a leading memory device manufacturer, paving the way for expanded market opportunities in the rapidly growing advanced memory IC testing sector.
AEM’s R&D effort is bearing fruits. In its 1HFY2025 financial report, the Group expected revenue in 2H2025 to be in the range of S$170 million to S$190 million, with its major AI / HPC customer expecting to ramp production in late 2025 / early 2026 for its next generation AI accelerator. For the 3rd quarter financial report, the Group reaffirms its revenue guidance for the second half of 2025, with performance expected to reach the upper end of the guidance range (S$170 million to S$190 million). Demand from the Group’s major AI / HPC customer remains robust, and based on current visibility, its revenue contribution is anticipated to grow significantly in FY2026 as compared to FY2025.
Based on the above, investor will be looking closely at the next few quarters’ financial results to assess if the ramp from the new customer could help to reduce its revenue concentration from Intel. While that day should come, investors were cheering as AEM share price got an unexpected boost from Intel when the US chipmaker announced Nvidia’s shock decision to invest US$5 billion in Intel shares. Intel also revealed that the US government would also invest US$8.9 billion in Intel shares. The twin deals helped to push Intel shares to a 1-year high of US$37, lifting AEM share price in the process as well.
Riding on the recovery of Intel’ shares, AEM share price hit a high of $2.05 on 3 October 2025. The turnaround of AEM share price caught many investors by surprise due to the depressed form for such a long period of time. However, the counter began to correct to $1.70 due to market’s fear of AI bubble. The fear came on the back of several multi-billion dollar deals on AI, such as that of OpenAI deal with Samsung and SK Hynix, pushing valuations of several tech stocks to sky-high levels.
Dark clouds loom for AEM share price
On the surface, AEM share price should be riding on the AI boom and Intel’s recovery. However, the company has a knack of shooting itself in the foot. Just when investors thought that its light at the end of the tunnel for AEM share price, investors must be stunned to receive news of yet another lawsuit from AEM’s competitor, Advantest, who is suing AEM over alleged infringement of 2 patents relating to wafer-level test systems.
AEM claims that the patents relate to a specific wafer level test system that is not practiced by the company and that it strongly denies the allegations in Advantest’s complaint. AEM has already retained U.S. counsel to defend itself against Advantest’s claims, which lack merit.
It all seems like déjà vu to me as the Advantest has previously sued AEM over patent infringement in 2021. In that saga, AEM has paid Advantest US$20 million in two instalments. Additionally, that was a long drawn-out legal battle, causing AEM to incur massive legal fees. According to DBS research, AEM incurred $11.1 million/$27.0 million/$9.0 million in FY21/22/23 vs $5.1 million in FY20 and $9.2 million in FY24. Both the legal fees and arbitration settlement have weighed on AEM’s financial performance in recent years, plunging the company into turmoil.
The company also maintained that “the filing of Advantest’s latest complaint does not affect AEM’s business operations, its existing commercial offerings or products, or its ongoing ability to serve its customers. The Company maintains its revenue guidance for 2H 2025 as previously announced on 13 Aug 2025”. Notwithstanding the stance made by AEM, I do think that its too premature to claim that the latest lawsuit will not have material impact on the reputation of AEM given that it is still a relatively unknown player in the global stage. For this reason, I do think that investors should thread with caution.
Creative Technology’s 2006 battle with Apple provided a sobering lesson for both Temasek and AEM. That saga highlighted that the way to win the technology war is to protect intellectual property through filing of patents. Incidentally, Stats Chippac obtained its first US patent for its chip testing equipment in 2016, after Temasek sold the company. Over at Temasek, the sovereign wealth fund had backed Grab Holdings which had 12 granted patents and 255 pending patent applications as of 31 May 2021. Temasek had also nurtured another SGX-listed company, Nanofilm Technology which holds around 48 patents.
In August 2021, AEM placed out 26.8 million shares to Temasek for a cash consideration of $103.1 million. The initiating factor for Temasek to invest in AEM should be the company’s proprietary capability in back-end chip testing. If you scan the landscape in Singapore, you would realize that there are very few listed home-grown semiconductor companies which possess patents. AEM belongs to this unique group. Its peers, Frencken and UMS do not hold any patents.
The patents used in AEM’s thermal control of its System Level Test equipment allows high powered chip to be tested under thermal controlled environment without damaging the chip. My hypothesis is that Temasek Holdings might have anticipated the grant of these patents to AEM and this could have prompted the sovereign wealth fund to invest in the company.
Financial performance
On the basis of the financial data, it appears to me that AEM still has not wean off its reliance on Intel, so diversifying revenue stream remains the top of AEM’s strategic priority.
The latest result basically reflected the strategy of customer diversification is on track but Intel continued to cast a shadow over AEM’s financial performance. For 9M2025, the Group recorded revenue of S$287.5 million, an increase of 16.0% year-onyear. This performance was driven primarily by the ramp into high-volume manufacturing at its major AI / HPC customer, along with the pull-in of orders related to its non-cancellable, long-dated purchase order program with one of the Group’s customers in both 1H2025 and 3Q2025 – presumably Intel.
Notwithstanding the headwinds, I noted that the financial strength of AEM has actually improved in 1HFY2025. The Group generated operating cash flows of S$46.4 million during 1HFY2025, increasing cash balances by 36.6% from 31 December 2024 while reducing financial liabilities by 22.7%. Additionally, inventories dropped from $296 million in December 2024 to $245 million in June 2024. The reduction in inventories may be an indication that AEM is ramping up production for its Test Cell Solutions (TCS) business unit.
The TCS unit continues to be AEM’s key business unit as it generated $118.6 million worth of revenue and $5 million profit in the first half of the year. Had it not been the $6 million foreign exchange loss, the financial performance for 1HFY2025 would have been good. Balance sheet is still healthy, with current assets amounting to $448 million while current liabilities amounted to $122 million.
Conclusion
It is not a secret that AEM has been struggling to turn around the corner for the past few years. Despite the challenges, Temasek Holdings has not trimmed its stake in AEM. This is unlike the rest of the substantial shareholders like Malaysia’s EPF and Aberdeen, which had pared down their stakes in AEM in the past few years in order to reduce their risk exposures. The steadfast conviction of Temasek Holdings in AEM might be puzzling for many investors. Yet, in my perspective, I believe that conviction could be driven by Singapore’s government.
If you look back over the decades, Singapore has not produced many innovative products at the global market stage, probably due to the very small talent pool. Against this backdrop, AEM Holdings must have attracted the attention of the Singapore government with its various technology patents to support the System Level Test 2.0 solutions for the semiconductor industry
Those who had sold off their stakes in AEM were either disillusioned with the business performances of the company or have moved on to other counters which may provide better returns. I would be lying if I said that the thought of exiting this counter has not crossed my mind but cutting losses is not an option for me as the losses that would be incurred would be substantial.
The macro-economic fundamentals have turned favorably for AEM but the looming Advantest lawsuit could throw a spanner in the works for AEM’s business recovery. That said, the long-term potential of AEM is there but existing investors need to have strong holding power to withstand this winter. In this regard, I am cautiously optimistic that AEM share price may turn bullish in 2026. Till then, enjoy the ride.
