With the S&P 500 trading at elevated valuations similar to the dot-com bubble peak, a market correction appears increasingly likely. The article recommends two AI-focused growth stocks—Cohu and Upstart—as potential buying opportunities if a downturn occurs. Cohu supplies semiconductor testing equipment critical to AI chip production, while Upstart uses AI to revolutionize loan underwriting with superior accuracy compared to traditional methods.

Teradyne has enhanced its Titan HP platform for AI chip testing, driving strong Q2 2026 results with Semi Test revenues up 128% and compute revenues up nearly 600%. The company faces competition from KLA and Cohu in the AI-driven semiconductor testing market. TER stock has surged 108% year-to-date but trades at a premium valuation with a forward P/S ratio of 10.77X versus the industry average of 7.25X.

Teradyne (TER) shares have surged 129.6% year-to-date, driven by strong AI infrastructure demand and record memory revenues of $212M in Q2. The company expects Q3 revenues of $1.20-$1.30B with 140% YoY earnings growth. However, stretched valuation at 11.93X forward P/S, rising competition from Cohu and KLA, and margin pressure present risks. Zacks rates TER as a Hold, recommending investors wait for a better entry point.

Teradyne's memory revenues hit a record $212M in Q2 2026, marking its third consecutive quarter above $200M, driven by strong demand for HBM, DRAM, and NAND testing. The company launched Magnum E2, a next-generation memory test system supporting advanced interfaces like LPDDR6, DDR6, GDDR7, and NAND. Management expects the 2026 memory test TAM to grow over 40% compared to 2025. However, TER stock trades at a premium valuation and faces competition from KLA and Cohu.

Cohu, a semiconductor testing and inspection equipment supplier, is positioned to benefit significantly from the AI data center boom. The company supplies critical quality control machines to major chip manufacturers and has an expanding $850 million sales pipeline in the AI segment. With projected 35% revenue growth to $612 million in 2026 and potential earnings doubling to $1.85 per share in 2027, analysts suggest the stock could deliver strong returns despite its current premium valuation.

Cohu CEO Luis Muller sold 55,794 shares worth $3.3 million on September 21, 2026, representing 6% of his holdings. The sale was executed under a pre-planned Rule 10b5-1 trading schedule adopted in May 2026. Despite the insider sale, analysts view this as non-concerning given the company's strong 169% stock appreciation over the past year, 33% year-over-year revenue growth, and narrowing operating losses.

Aehr Test Systems (AEHR) has surged 363% in 2026 driven by AI semiconductor testing demand, but now trades at 18.59X forward sales—over 3x its historical median. While the company has strong backlog ($100.6M) and positive analyst sentiment, the elevated valuation leaves minimal margin for error. Key risks include heavy customer concentration (70% from top 5 customers), execution challenges, and semiconductor spending cyclicality. The stock carries a Zacks Rank #3 (Hold) rating.

Teradyne is capitalizing on strong AI-driven semiconductor test demand with its UltraFLEXplus platform, which achieved 128% year-over-year growth in Q2 2026. The company recently launched three new instruments to support AI and data-center computing requirements. TER stock has surged 84.4% year-to-date but trades at a premium valuation. The company faces competition from KLA and Cohu, both expanding their AI infrastructure presence.

Cohu Director Steven Bilodeau sold 10,257 shares worth approximately $460,000 on May 20, 2026, at $44.85 per share, reducing his direct holdings by 16.40%. The sale occurred amid strong stock performance, with Cohu up 153.3% year-over-year and the stock subsequently reaching a multi-year high of $70.92 in June. Bilodeau retained over 50,000 shares, and the sale appears to be profit-taking following solid first-quarter earnings driven by strong demand for the company's semiconductor test equipment in the AI sector.

Cohu stock surged 7.22% on April 20, 2026, following bullish coverage from B. Riley, which raised its price target from $41 to $50 per share. The investment firm cited strong demand in wafer-fab equipment and favorable trends in the memory-chip industry, with AI-driven semiconductor demand providing additional tailwinds. The stock is up roughly 90% year-to-date and trades at approximately 4x expected sales.

Cohu stock fell 6.86% after reporting Q4 results with revenue of $122.2 million (up 30% YoY, meeting expectations) but posting an unexpected adjusted loss of $0.15 per share versus analyst expectations of $0.06 profit. The company projects Q1 revenue roughly in line with Q4 and expects gross margins to improve to ~45%, with HBM product sales anticipated between $15-20 million for the full year.

Semiconductor equipment provider Cohu reported Q2 2025 results exceeding Wall Street expectations, with revenue of $107.7 million and positive non-GAAP earnings. The company saw growth primarily in the mobile segment, secured a $28 million design-win order, and continues to focus on strategic acquisitions and cost management.