Semiconductor test equipment stocks drop sharply after huge 2023 gains amid sector-wide profit-taking.

Shares of semiconductor test equipment companies like Aehr Test Systems, Teradyne, FormFactor, and Cohu fell significantly on Wednesday following massive year-to-date gains, signaling profit-taking in this niche. Aehr Test Systems led the decline with a 10% drop after a 510% rise earlier in the year. The pullback occurred despite easing long-term Treasury yields, suggesting the move is driven by investors reducing exposure to AI hardware winners rather than bond market concerns. The broader semiconductor ETF (SPDR S&P Semiconductor ETF) declined only 2%, showing the selloff is concentrated in test equipment stocks. Investors should watch if the broader chip sector joins the selloff or if this remains isolated to test equipment names.