Auto Draft

Cohu, Inc. (NASDAQ:COHU) is among the 7 Small-Cap Semiconductor Stocks to Buy According to Analysts.

Why Needham Is Telling Investors to Buy the Dip in Cohu, Inc. (COHU)

On February 13, Needham lifted the price target on Cohu, Inc. (NASDAQ:COHU) to $33 from $30 and reiterated a Buy rating. This price target hike comes even after the reported Q4 2025 revenue that matched the estimates, but non-GAAP gross margins were meaningfully lower than the projection. This happened because of a one-time inventory charge, which represents 350 basis points of the total 420-basis-point shortfall.

For Q1 2026, Cohu, Inc. (NASDAQ:COHU) projects revenue to be flat QoQ, with non-GAAP gross margins anticipated to recover to nearly 45%. The firm pointed to a major data center design win at an analog/mixed-signal customer, expected to generate additional revenue in 2026, in addition to current High Bandwidth Memory and AI compute applications. With that said, Needham advised “buying the dip” in the stock and raised its forecasts.

On the same day, TD Cowen said the quarter miss can be ignored, but a roughly flat QoQ outlook will likely leave some disappointed. The firm’s analyst, Krish Sankar, raised the price target on Cohu, Inc. (NASDAQ:COHU) to $35 from $30 and maintained a Buy rating, citing healthy trends in its core financials.

Cohu, Inc. (NASDAQ:COHU) is a California-based provider of semiconductor test equipment and services. Founded in 1947, the company also provides AI process control and analytics-based monitoring software.

While we acknowledge the potential of COHU to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than COHU and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 40 Most Popular Stocks Among Hedge Funds Heading Into 2026 and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. Follow Insider Monkey on Google News.