What Happened?
Shares of semiconductor testing company FormFactor (NASDAQ: FORM) jumped 2.7% in the afternoon session after the company's stock rose along with others in the semiconductor sector after industry giant ASML Holding reported better-than-expected orders for the third quarter.
ASML, a major chip-making equipment manufacturer, posted orders of 5.40 billion euros, a large increase from 2.63 billion euros a year earlier. This surge was fueled by strong demand for sophisticated semiconductors used to power artificial intelligence. The strong performance from an industry leader like ASML created positive sentiment for the entire sector, suggesting a healthy demand environment that could also benefit other equipment makers. The positive outlook for the sector was further supported by a forecast for significant growth in the global semiconductor equipment parts market.
After the initial pop the shares cooled down to $41.47, up 3% from previous close.
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What Is The Market Telling Us
FormFactor’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 6.3% on the news that B. Riley upgraded its rating on the stock from Neutral to Buy and significantly raised its price target. The firm increased its price target to $47.00 from a previous $34.00. The upgrade was based on increased confidence that FormFactor, a provider of test and measurement technologies for semiconductors, could improve its gross margins to a target level of 47% through better operations. The analyst also highlighted the company's strong position in the DRAM High Bandwidth Memory (HBM) market, which is seeing robust demand. Emerging opportunities with major chip companies were also noted as a positive factor.
FormFactor is down 6.2% since the beginning of the year, and at $41.47 per share, it is trading 13.3% below its 52-week high of $47.80 from December 2024. Investors who bought $1,000 worth of FormFactor’s shares 5 years ago would now be looking at an investment worth $1,410.
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