FormFactor (FORM) is back on investors’ radar after first quarter 2026 earnings, with sales of US$226.14 million and net income of US$20.38 million, along with Q2 guidance pointing to record quarterly revenue.

The strong first quarter and guidance have come alongside sharp share price momentum, with a 30 day share price return of 37.63% and a year to date share price return of 144.43%, while the 1 year total shareholder return is very large.

If FormFactor's recent run has you thinking about where else growth stories might be forming around AI, it could be worth scanning 40 AI infrastructure stocks

With FormFactor now trading around US$144.68 after a very large 1 year total return and sitting above the consensus analyst price target, the key question is whether recent AI driven optimism leaves any upside or if the market is already pricing in future growth.

Most Popular Narrative: 42.5% Overvalued

FormFactor's most followed narrative pegs fair value at $101.56, which sits well below the last close of $144.68 and sets a high bar for expectations.

Accelerating adoption of generative AI, high-performance computing, and HBM DRAM in data centers is driving substantial increases in test complexity and intensity. FormFactor's differentiated probe cards and early leadership in HBM4 chiplet testing position the company to benefit from higher ASPs and revenue growth as these markets scale. (Impacts: Revenue, potential margin improvement)

Want to see what kind of revenue ramp and margin step up this narrative is leaning on, and how that feeds into future earnings power and valuation multiples? The underlying model bakes in rising demand across AI centric end markets, richer test intensity per chip, and a profitability profile that looks very different to today, all discounted back using a single required return.

Result: Fair Value of $101.56 (OVERVALUED)

However, the narrative still leans on FormFactor improving margins despite cost and tariff pressures, while maintaining demand with a customer base that remains concentrated and cyclical.

Next Steps

With optimism and concern both in the mix, this is a moment to look closely at the underlying data and move beyond the headline story. If you want a compact view of what is driving enthusiasm and what could go wrong, take a look at the 2 key rewards and 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.