FormFactor, Inc. FORM delivered record second-quarter 2026 results as management highlighted accelerating demand tied to high-performance computing, advanced packaging and artificial intelligence applications. Executives emphasized improving profitability, expanding capacity and broader customer exposure as key drivers of the company’s growth path.

FORM also raised its near-term outlook, pointing to continued revenue and margin expansion while progressing toward its long-term target model focused on higher revenues and profitability.

FORM Reaches Key Profitability Milestones

Mike Slessor, CEO, president and director, said FormFactor achieved record revenues, gross profit and earnings per share in the second quarter. Slessor highlighted two milestones: surpassing a $1 billion annual revenue run rate and exceeding 50% gross margin.

The company reported revenues of $258.24 million, up 31.89% year over year, beating the Zacks Consensus Estimate of $240.1 million. Non-GAAP earnings per share came in at 82 cents, surpassing the Zacks Consensus Estimate of 61 cents.

FormFactor, Inc. Price, Consensus and EPS Surprise

FormFactor, Inc. Price, Consensus and EPS Surprise

FormFactor, Inc. price-consensus-eps-surprise-chart | FormFactor, Inc. Quote

Slessor said the results reflected a multiyear effort to strengthen FormFactor’s position at the intersection of high-performance compute and advanced packaging while improving execution and operating leverage.

FormFactor Sees Broad AI-Driven Demand

FormFactor highlighted strong demand across major growth areas, including high-bandwidth memory (“HBM”) and co-packaged optics (“CPO”). Management said both probe card and Systems segments benefited from this demand during the quarter.

HBM represented about two-thirds of DRAM revenues, driven by customer adoption of SmartMatrix full wafer contactor technology for high-speed HBM4 applications.

Slessor said the company’s diversification strategy is gaining traction as it serves multiple semiconductor customers and applications rather than relying on a single market segment.

FORM Expands CPO Opportunity

FormFactor’s Systems segment recovered strongly, with revenues nearly doubling sequentially in the second quarter. Management attributed the improvement to recovery in engineering prober demand and accelerating growth in CPO.

The company now expects 2026 CPO revenues to exceed the previously communicated $10 million to $20 million range and significantly surpass $20 million for the year.

Slessor said CPO adoption remains in early stages but represents a significant opportunity as semiconductor companies pursue more efficient data center connectivity solutions.

FormFactor Advances Margin Expansion

CFO Aric McKinnis said second-quarter non-GAAP gross margin reached 53.3%, up 430 basis points sequentially and nearly 15 percentage points higher than the prior-year period.

McKinnis noted that roughly one-third of the sequential margin improvement came from durable cost reductions, one-third from higher revenues and one-third from non-recurring items including tariff refunds and precious metal reclaim benefits.

Management said normalized gross margin at current volumes is around 51%, with additional improvement expected from operational execution and the future contribution of the Farmers Branch manufacturing expansion.

FORM Expands Capacity for Growth

FormFactor continues preparing its Farmers Branch facility, which is expected to begin ramping in the fourth quarter and continue through 2027. Management said the site will provide additional capacity at a structurally lower cost.

McKinnis said the company is improving output from existing facilities through higher yields and cycle-time improvements while managing supply constraints.

The company expects Farmers Branch to support growth, with initial targeted capacity roughly equivalent to its current California probe footprint.

FORM Highlights Growth Markets

Analysts questioned management on the company’s exposure to CPU, GPU and hyperscaler opportunities. Slessor said FormFactor is positioned across multiple customer relationships, including data center CPUs, high-performance computing and custom ASIC applications.

A TD Cowen analyst asked about sustainable gross margin levels after the quarter’s strong performance. McKinnis clarified that the company views approximately 51% gross margin as the current normalized baseline, with Farmers Branch expected to add further improvement over time.

A Citi analyst asked about CPO growth expectations. Slessor said adoption is accelerating but remains difficult to forecast quarter by quarter due to variables including customer adoption rates and test requirements.

FormFactor Maintains Growth Trajectory

FormFactor’s management emphasized continued execution around capacity expansion, cost discipline and semiconductor market opportunities. The company expects these efforts to support progress toward its long-term target model of doubling revenues and more than doubling profitability by 2030.

FORM’s near-term priorities remain scaling production capacity, supporting demand in AI-related semiconductor applications and improving operational efficiency as new facilities ramp.

Zacks Rank & Style Scores Signals

FORM currently carries a Zacks Rank #3 (Hold). The Zacks Rank is based on earnings estimate revisions and is designed to help identify stocks with stronger potential for near-term performance changes. The rank can change as analysts update estimates following quarterly results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has a Value Score of F, Growth Score of A, Momentum Score of B and VGM Score of B. Zacks Style Scores range from A to F, with higher scores indicating stronger characteristics for each investing style, while the VGM Score combines Value, Growth and Momentum factors.

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FormFactor, Inc. (FORM): Free Stock Analysis Report

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