Teradyne ((TER)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Teradyne conveyed a generally positive sentiment, driven by robust demand in AI compute and financial performance that surpassed expectations. Despite facing challenges in the robotics and memory segments and uncertainty in the mobile market, the positive developments in AI compute and strategic acquisitions were highlighted as significant strengths, indicating an overall optimistic outlook.
AI Compute Surge
The demand for AI compute has significantly strengthened, becoming the primary driver of Teradyne’s SOC business. This trend is expected to persist into the second half of 2025, contributing substantially to the company’s semi test revenue. The focus on AI compute underscores Teradyne’s strategic direction and potential for future growth.
Financial Performance Above Expectations
In Q2 2025, Teradyne reported revenue of $652 million and a non-GAAP EPS of $0.57, both surpassing the midpoint of guidance ranges. The non-GAAP gross margins stood at 57.3%, aligning with expectations. This financial performance reflects the company’s strong execution and market positioning.
Memory Business Wins
The Memory business unit achieved a significant milestone by securing an HBM4 post-stack singulated die win. This achievement is anticipated to be a crucial growth driver for the Memory Total Addressable Market (TAM) in the future, highlighting the unit’s potential for expansion.
Robotics Growth
Despite challenging market conditions, Teradyne’s new organizational structure for Robotics achieved a 9% quarter-on-quarter growth and secured a plan of record decision from a large customer. This growth indicates resilience and strategic alignment in the robotics sector.
Acquisition of Quantifi Photonics
Teradyne completed the acquisition of Quantifi Photonics, bolstering its leadership in silicon photonics test. This acquisition aligns with Teradyne’s strategy to increase its market share in AI compute, further strengthening its competitive position.
Weak Robotics Market
While robotics revenue increased quarter-over-quarter, it declined year-over-year due to persistent weak market conditions. The robotics segment is not expected to break even this year, indicating ongoing challenges in this area.
Decline in Memory Revenue
Memory revenue saw a significant decline both sequentially and year-over-year, attributed to the timing of customer deliveries. However, it is expected to recover in the second half, suggesting potential for a rebound.
Uncertain Mobile Segment Outlook
The outlook for the mobile segment remains modest for the third quarter and the second half of 2025. Growth is expected to be linked to future technology ramps and the development of more compelling AI applications, indicating uncertainty in this segment.
Forward-Looking Guidance
For the third quarter, Teradyne provided guidance with expected sales ranging from $710 million to $770 million and gross margins between 56.5% and 57.5%. The non-GAAP operating profit rate is projected at 19.5% at the midpoint of the Q3 guidance. The non-GAAP EPS is forecasted to be between $0.69 and $0.87, while GAAP EPS is expected to range from $0.62 to $0.80. A tax rate increase to 16.3% is anticipated for Q3 due to new legislation. The guidance reflects optimism in AI compute-related revenue, expected to drive significant growth in both the SOC and Memory divisions in the latter half of the year.
In summary, Teradyne’s earnings call highlighted a positive sentiment, driven by strong AI compute demand and financial performance exceeding expectations. While challenges persist in the robotics and memory segments, strategic acquisitions and a focus on AI compute position Teradyne for future growth. The company’s forward-looking guidance underscores its optimism in leveraging AI compute to drive revenue growth.