What Happened?
Shares of semiconductor testing company FormFactor (NASDAQ: FORM) fell 6.4% in the morning session after a sell-off in the artificial intelligence (AI) sector, sparked by investor concerns over high valuations.
The drop appeared linked to a wider downturn in AI-related stocks. This sentiment shift followed the market's reaction to Palantir's earnings. Although the data analytics company exceeded expectations, its shares slid, which seemed to worry investors about high valuations across the sector. This event was seen as a potential reality check for the AI boom. The concerns were not limited to the U.S., as AI-related stocks in Taiwan also saw profit-taking. Adding to the cautious mood, major Wall Street firms warned that global stock values might have reached unsustainable heights, setting the stage for a notable pullback.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy FormFactor? Access our full analysis report here.
What Is The Market Telling Us
FormFactor’s shares are extremely volatile and have had 34 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 5 days ago when the stock gained 23.9% on the news that the company reported strong third-quarter 2025 results that surpassed market expectations and provided an optimistic outlook for the upcoming quarter. The semiconductor testing company announced adjusted earnings per share (EPS) of $0.33, handily beating the consensus estimate of $0.25. Additionally, FormFactor's revenue for the quarter came in at $202.7 million, ahead of the anticipated $200 million. More importantly, the company's forecast for the fourth quarter was significantly stronger than anticipated. Management guided for revenue of approximately $210 million and an adjusted EPS of $0.35, both well above analysts' expectations. This robust guidance suggested accelerating demand, fueling investor optimism about the company's near-term prospects.
FormFactor is up 19.1% since the beginning of the year, but at $52.67 per share, it is still trading 11.1% below its 52-week high of $59.25 from October 2025. Investors who bought $1,000 worth of FormFactor’s shares 5 years ago would now be looking at an investment worth $1,623.
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