Cohu, Inc. has emerged from a deep semiconductor test downturn with a credible case for normalized earnings power. The Poway, California-based supplier of test handlers, semiconductor testers, and interface solutions posted second-quarter fiscal 2026 revenue of $149.0M. That figure rose 38.4% on a year-over-year basis. First-half revenue reached $274.1M, up 34.1% versus the prior comparable period. The growth reflects a recovery in artificial intelligence-related capital spending, an early industrial market pickup, and a much improved mix of complete system shipments. Gross margin in the quarter widened to 45.4% from 43.7%. Operating income flipped positive, ending a string of operating losses across 2025.
The balance sheet remains the franchise's defining feature and source of strategic flexibility. Cohu exited the quarter with $498.2M in cash and short-term investments. Total gross debt stood at $296.2M against that cash cushion. The debt stack anchors on $287.5M of convertible senior notes maturing in 2031. Net cash of $202.0M positions the company to fund product development and absorb working-capital swings. A $22.8M share repurchase authorization remains undrawn. The convertible debt carries an initial conversion price of approximately $27.18 per share. Recent share-price strength pushed the equity above the 130% trigger threshold, opening a quarterly conversion window.
Risks remain real and concentrated for the franchise. The customer base remains highly concentrated, with one customer above 10% of sales in the most recent quarter. End markets outside of artificial intelligence remain uneven, particularly automotive and consumer. Inventory build of $18.2M during the half signals demand expectations that, if unmet, could pressure margins through excess reserves. A goodwill balance of $278.9M sits at the Interface Solutions reporting unit, where excess fair value over carrying value is thinner than at other reporting units. Investors should view Cohu as a leveraged cyclical recovery story with strong liquidity, disciplined cost posture, and a meaningful convertible overhang that mutes near-term upside.