FormFactor stock up 22% and drawing $35 million in new stake as form beats Q3 estimates

FormFactor doesn’t sit in the headline-grabbing AI chip race, but it supplies the picks and shovels that tell chip makers whether those increasingly complex designs actually work. That situation became apparent in the last quarter. Revenue reached $202.7 million, while gross margin was 39.8% on a GAAP and 41.0% on a non-GAAP basis, expanding approximately 250 basis points sequentially. Free cash flow rebounded to $19.7 million after a weak second quarter, and management guided for the next step in revenue, earnings, and margins in Q4.

Specifically, DRAM probe cards posted record double-digit sequential growth driven by high-bandwidth memory demand, while the systems segment gained momentum toward early volume production in co-packaged optics. That mix helps explain why this position landed as a mid-single-digit allocation rather than a token trade. In context, this fund already holds other IP- and semiconductor-related names, but ultimately, FormFactor adds exposure to profitability improvement rather than pure cycle recovery.

Assets Under Management (AUM): The total market value of investments managed by a fund or firm on behalf of clients.
13F Reportable Assets: U.S. equity securities that institutional investment managers are required to disclose quarterly to the SEC via Form 13F.
Status: The amount of a particular security or investment held by an individual or organization.
New post: Investments in securities or assets that have not previously been held in a portfolio.
Last Twelve Months (TTM): 12-month period ending with the most recent quarterly report.
Forward P/E: The price-to-earnings ratio uses projected earnings for the next year, estimating how much investors will pay per dollar of future earnings.
EV/EBITDA: enterprise value divided by earnings before interest, taxes, depreciation, and amortization; Used to compare company value and profitability.
Decreasing funds: The process of reducing the size or number of holdings in an investment fund, often to manage risk or liquidity.
bet: An investor’s ownership interest or share in a company or property.
Probe Cards: Equipment used to test semiconductor wafers by making temporary electrical contact with circuits during manufacture.
Metrology System: Equipment used to measure and analyze the physical properties of materials or equipment, often for quality control in manufacturing.
Fabless Semiconductor Companies: Firms that design chips but outsource production to specialized manufacturing plants (foundries).

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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has articles and recommends Wix.com. The Motley Fool recommends Flex. Motley Fool has a disclosure policy.

FormFactor Stock Up 22% and Drawing $35 Million in New Stake as Firm Beats Q3 Estimates was originally published by The Motley Fool.