FormFactor, Inc. (FORM)
NASDAQInformation TechnologySemiconductorsSnapshot 2026-09-04
$103.90+7.38%
Close 2026-09-04 · 1-day change
NASDAQInformation TechnologySemiconductorsSnapshot 2026-09-04
Intact: The reason to own it still holds.
FormFactor grows revenue about 19% a year, hitting $240 million next quarter. Profit margins improve to about 47%. Operating income rose from $3.3 million to $16.6 million last year. The company shows stable management and solid execution.
The stock is down 33.7% from its high and trades at a high price-to-earnings ratio of 71. Margins could compress if demand weakens. Revenue growth might slow below 15%, hurting profits and valuation.
The price is about 20% above our fair value near $88, reflecting strong revenue growth of about 19%. Our fair value is 42% below the Street median, so the market prices in more optimism than we see.
Breaks if: Gross margin falls below 40% next quarter
Expand gross margins through operational efficiencies and product mix improvements, targeting sequential and year-over-year margin increases.
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
This investment represents a durable compounder with a focus on growth and margin improvement. The current thesis state is intact, supported by recent strong financial performance, but it faces high risks and an expensive valuation.
The market currently prices in an expensive valuation, reflecting high expectations for FORM's future performance. There is an expectations gap of 0.26, suggesting that the market anticipates continued strong results despite the fragile earnings quality.
Management is on track with priorities to increase revenue growth, improve gross profit margins, and enhance operating income. Recent financial results show strong growth, but there is a low probability of missing estimates, which could impact sentiment.
The long-term thesis hinges on key factors such as guidance from management in upcoming calls, potential Fed rate cuts, and performance from sector bellwethers like NVDA, TSM, and AVGO. Any negative guidance could lead to significant downward pressure.
The most important moves since the prior daily snapshot.
Yes, our read has strengthened. The latest earnings beat supports this improved outlook. There are no new threats impacting the thesis.
as of 2026-09-04
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
Stated as a priority in 3 of last 3 quarters. Non-GAAP gross margin increased from 38.5% in 2025-Q2 to 53.3% in 2026-Q2, showing significant margin expansion. Management's focus on margin improvement aligns with the strong upward trajectory in reported margins.
“Non-GAAP gross margin for Q2 2026 was 53.3%, compared with 49.0% in Q1 2026 and 38.5% in Q2 2025.”
“Non-GAAP gross margin for Q1 2026 was 49.0%, up from 43.9% in Q4 2025.”
“Non-GAAP gross margin for Q4 2025 was 43.9%, up from 41.0% in Q3 2025.”
Breaks if: Operating income falls below $10 million next quarter
Drive operating income growth through revenue expansion and disciplined expense management.
Stated as a priority in 3 of last 3 quarters. GAAP operating income increased from $12.3 million in 2025-Q2 to $57.8 million in 2026-Q2, demonstrating strong operating leverage. Management's emphasis on enhancing operating income is supported by the substantial growth in operating income.
“GAAP operating income was $57.8 million in Q2 2026, compared to $16.6 million in Q1 2026 and $12.3 million in Q2 2025.”
“GAAP operating income was $16.6 million in Q1 2026, up from $23.5 million in Q4 2025.”
“GAAP operating income was $23.5 million in Q4 2025, up from $18.0 million in Q3 2025.”
Breaks if: Revenue falls below $220 million next quarter
Continue driving sequential and year-over-year revenue growth across key segments including Probe Cards and Systems.
Stated as a priority in 3 of last 3 quarters. Revenue increased from $215.2 million in 2025-Q4 to $258.2 million in 2026-Q2, a 20% growth. Management consistently emphasized record and sequential revenue growth, and the financials show delivering on this priority.
“FormFactor has grown revenue more than 30% over past four quarters, with record revenue in Q2 2026 of $258.2 million.”
“Quarterly revenues were $226.1 million, an increase of 5.1% compared to Q4 2025 and 32.0% from Q1 2025.”
“Quarterly revenues were $215.2 million, up 6.2% from Q3 2025 and 13.6% from Q4 2024.”
In the next 1 to 3 years, FORM's performance will depend on its ability to maintain momentum amidst high valuation and risks. Not investment advice.