Teradyne (TER) AI Stock Analysis

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Teradyne

(NASDAQ:TER)

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Outperform 71 (OpenAI - 5.2)

Rating:71Outperform

Price Target:

$266.00

▲(6.60% Upside)

Teradyne's overall stock score reflects a stable financial position with strong AI-driven growth prospects. However, high valuation, potential technical pullbacks, and challenges in certain segments weigh on the score. The company's strategic focus on AI opportunities is a key strength, but profitability and operational efficiency need improvement.

Positive Factors

AI-driven Semiconductor Test Demand

Structural AI investment is accelerating demand for high-end semiconductor test equipment. Sustained AI compute, networking and memory growth supports multi-quarter orders, improving revenue visibility and justifying continued investment in capacity and product R&D.

Strong Profitability Margins

High gross and net margins reflect pricing power and capital-light test equipment economics, enabling durable cash generation. These margins provide a buffer to fund R&D and sales investment while maintaining healthy operating cash flow over the medium term.

Conservative Balance Sheet

Very low leverage gives Teradyne flexibility to invest in cyclical downturns, pursue strategic opportunities, and sustain capex/R&D spending without stress. This capital structure supports long-term stability through semiconductor cycle volatility.

Negative Factors

Declining Return on Equity

A sharply reduced ROE indicates the company is generating limited profit relative to equity, suggesting inefficient capital deployment or profit dilution. If persistent, this undermines shareholder returns and points to structural profitability challenges beyond cyclical revenue swings.

Rising Operating Expenses

Higher R&D, sales and variable compensation to capture AI opportunities increases fixed cost base. If revenue growth slows, elevated operating expense levels could compress EBIT margins and reduce free cash flow sustainability over the medium term.

Stagnant Robotics Revenue

Flat robotics performance limits diversification away from semiconductor cyclicality. Failure to grow robotics meaningfully reduces structural revenue balance, leaving the company more exposed to semiconductor market swings and concentrated end-market risk.

Teradyne (TER) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$37.75B

Dividend Yield0.24%

Average Volume (3M)2.28M

Price to Earnings (P/E)87.7

Beta (1Y)1.83

Revenue Growth4.56%

EPS Growth-15.44%

CountryUS

Employees6,500

SectorTechnology

Sector Strength88

IndustrySemiconductors

Share Statistics

EPS (TTM)1.80

Shares Outstanding156,608,300

10 Day Avg. Volume2,546,833

30 Day Avg. Volume2,282,636

Financial Highlights & Ratios

PEG Ratio2.15

Price to Book (P/B)7.11

Price to Sales (P/S)7.10

P/FCF Ratio42.25

Enterprise Value/Market Cap1.05

Enterprise Value/Revenue13.81

Enterprise Value/Gross Profit23.44

Enterprise Value/Ebitda61.30

Forecast

1Y Price Target

$249.93

Price Target Upside0.16% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering14

EPS Forecast (FY)5.52

Revenue Forecast (FY)$3.88B

Teradyne Business Overview & Revenue Model

Company DescriptionTeradyne, Inc. designs, develops, manufactures, sells, and supports automatic test equipment worldwide. The company operates through Semiconductor Test, System Test, Industrial Automation, and Wireless Test segments. The Semiconductor Test segment offers products and services for wafer level and device package testing in automotive, industrial, communications, consumer, smartphones, cloud computer and electronic game, and other applications. This segment also provides FLEX test platform systems; J750 test system to address the volume semiconductor devices; Magnum platform that tests memory devices, such as flash memory and DRAM; and ETS platform for semiconductor manufacturers, and assembly and test subcontractors in the analog/mixed signal markets. It serves integrated device manufacturers that integrate the fabrication of silicon wafers into their business; fabless companies that outsource the manufacturing of silicon wafers; foundries; and semiconductor assembly and test providers. The System Test segment offers defense/aerospace test instrumentation and systems; storage test systems; and circuit-board test and inspection systems. The Industrial Automation segment provides collaborative robotic arms, autonomous mobile robots, and advanced robotic control software for manufacturing, logistics, and light industrial customers. The Wireless Test segment provides test solutions for use in the development and manufacture of wireless devices and modules, smartphones, tablets, notebooks, laptops, peripherals, and Internet-of-Things devices under the LitePoint brand name. This segment also offers IQxel products for Wi-Fi and other standards; IQxstream solution for testing GSM, EDGE, CDMA2000, TD-SCDMA, WCDMA, HSPA+, LTE, and 5G technologies; IQcell, a multi-device cellular signaling test solution; IQgig test solution; and turnkey test software for wireless chipsets. Teradyne, Inc. was incorporated in 1960 and is headquartered in North Reading, Massachusetts.

How the Company Makes MoneyTeradyne generates revenue through the sale of its test systems and automation solutions, which are critical for ensuring the reliability and performance of electronic devices. The company's revenue model is primarily based on direct sales of test equipment, software, and services, with significant revenue coming from its Semiconductor Test segment, where it provides solutions for testing chips used in smartphones, computers, and other electronic products. Additionally, the System Test segment contributes revenue through testing solutions for complex systems, such as those used in automotive and aerospace applications. Teradyne also benefits from recurring revenue through service contracts and software updates. Strategic partnerships with leading semiconductor manufacturers and technology companies further enhance Teradyne's market position and contribute to its financial performance.

Teradyne Key Performance Indicators (KPIs)

Any

Revenue by Geography

Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.

Chart InsightsTeradyne's revenue in Asia Pacific shows signs of recovery in 2024 and 2025 after a decline in 2023, likely driven by strong AI demand in semiconductor tests. The Americas and EMEA regions have experienced fluctuations, with EMEA facing a notable drop in early 2025. Despite challenges in mobile and auto industrial segments, the company anticipates robust Q4 growth, fueled by AI-related demand, which could stabilize geographic revenue variances. However, increased operating expenses and flat robotics performance may temper overall profitability.

Data provided by:

The Fly

Teradyne Earnings Call Summary

Earnings Call Date:Feb 02, 2026

(Q4-2025)

Next Earnings Date:Apr 28, 2026

Earnings Call Sentiment Positive

The call presented very strong operational and financial results, led by an AI-driven surge across Semiconductor Test, with record-like quarterly revenue, large sequential growth, strong margins, robust cash generation, and an ambitious midterm target earnings model. Offsetting these positives are recurring concerns about revenue lumpiness, customer concentration, inventory write-downs, and limited visibility into the second half of 2026 (including merchant GPU timing). On balance, the highlights (broad revenue/earnings beat, AI-powered demand, clear pathway to materially higher midterm earnings, and healthy capital returns) materially outweigh the lowlights, though execution and timing risks remain.

Q4-2025 Updates

Positive Updates

Quarterly Revenue and EPS Beat

Q4 sales of $1.083 billion and non-GAAP EPS of $1.80 were both above the high end of guidance; Q4 was the highest revenue quarter of 2025 and the company's second-highest quarter ever.

Strong Sequential Growth Driven by AI

Company reported 41% sequential revenue growth in Q4; AI-driven demand accounted for >60% of revenue in Q4 (40–50% in Q3) and is expected to drive >70% of revenue in Q1 2026.

Semiconductor Test Strength (SoC & Memory)

Semi Test revenue was $883M in Q4. SoC revenue was $647M, up 47% quarter-over-quarter; memory revenue was $206M, up 61% quarter-over-quarter and a record sales quarter for memory. Full-year Semiconductor Test grew 19% YoY; SoC test revenue grew 23% YoY; compute grew 90% YoY.

Full Year Revenue and EPS Growth

Full year 2025 revenue was $3.2 billion, up 13% YoY; non-GAAP EPS was $3.96, a 23% increase versus prior year.

Improved Profitability and Cash Generation

Q4 non-GAAP gross margin 57.2% and operating profit rate 29%; non-GAAP operating profit dollars roughly doubled to $314M quarter-on-quarter; Q4 free cash flow $219M and $450M for the full year.

Aggressive Shareholder Returns and Strong Liquidity Management

Returned $204M to shareholders in Q4 and $785M for the full year (174% of free cash flow); ended 2025 with $448M of cash and marketable securities and emphasized opportunistic capital allocation for M&A and buybacks.

Positive Group-Level Momentum

Product Test grew double digits in Q4 and full year Product Test up 8% driven by defense/aerospace and successful Quantifi Photonics integration; Robotics revenue $89M (up 19% from Q3) with a meaningful e-commerce ramp (>5% of Robotics revenue in Q4).

Ambitious Evergreen Target Earnings Model

At an assumed ATE TAM of $12–$14B, Teradyne targets roughly $6B revenue, 59–61% gross margin, 27–29% OpEx, 30–34% operating profit, and non-GAAP EPS of $9.50–$11, implying ~2x revenue and ~2.5x EPS vs 2025 over the midterm.

Strategic Business Development

Announced majority-owned joint venture with MultiLane to address high-speed I/O and data-center interconnect test demand (expected close in H1 2026) and noted new HDD and SLT customer wins and broader IST customer diversification; expecting HDD revenue to roughly double from 2025 to 2026.

Negative Updates

Revenue Lumpiness and Customer Concentration

Business remains lumpy and concentrated: in 2025 there were two specifying customers >10% and one purchasing customer >10%; management repeatedly cautioned that a few large program ramps can materially move results quarter-to-quarter and year-to-year.

Uncertainty in 2H 2026 Visibility

Management has limited visibility into the second half of 2026 and expects a possible 2–3 quarter surge followed by a digestion period; ATE TAM growth for 2026 quoted very broadly (20–40%), reflecting material uncertainty.

Inventory Write-Down and Margin Pressure in Non-Semi Lines

Q4 non-GAAP gross margins (57.2%) were offset by lower Product Test group margins, robotics mix and an inventory write-down on legacy products, indicating some product-line margin pressure.

Mobile Market Uncertainty

Mobile TAM outlook is uncertain — management expects complexity to rise (mobile TAM modeled ~1.5x current) but is cautious on unit volumes and capital efficiency improvements, which could limit upside from mobile recovery.

Merchant GPU Ramp Timing and Share Uncertainty

Merchant GPU revenue was not included in Q1 guidance and is expected to contribute in 2H 2026; management expects single-digit share initially with multi-year ramp to potentially reach a competitive balance, creating timing risk to modeled revenue.

Dependence on AI Data Center Concentration

AI data center demand is now the primary growth driver (40–70% of revenue across recent quarters), increasing exposure to a single major end-market and associated cyclicality and program timing risk.

Potential Near-Term Digest Period

Management warned the strong Q1 run rate could be followed by a shorter digestion period as program timing and customer buying patterns normalize, introducing downside sequencing risk to 2026 cadence.

Company Guidance

Teradyne guided Q1 2026 revenue of $1.15–$1.25 billion (midpoint +11% sequential, +75% YoY) with non‑GAAP EPS of $1.89–$2.25 on ~158 million diluted shares; Q1 gross margin 58.5%–59.5% (midpoint +180 bps QoQ), OpEx up ~6% vs Q4 and running ~26%–28% of sales, and an implied non‑GAAP operating profit rate of ~32% at the midpoint. Management said AI will drive upwards of ~70% of Q1 revenue, they have a healthy backlog and expect 2026 to be front‑loaded (roughly 60% of sales in H1), and the MultiLane JV (closing H1) will be consolidated into Product Test and be accretive with de minimis EPS impact. Longer term, at an ATE TAM of $12–$14 billion they target roughly $6 billion of revenue with 59%–61% gross margin, OpEx 27%–29% of revenue, operating profit 30%–34% and non‑GAAP EPS $9.50–$11 (about 2x 2025 revenue and ~2.5x 2025 EPS).

Teradyne Financial Statement Overview

Summary

Solid fundamentals supported by strong gross margin (~58.9%) and healthy net margin (~15.5%) alongside very low leverage (debt-to-equity ~0.07). Offsetting this are declining EBIT/EBITDA margins and a sharply reduced return on equity, plus weaker cash conversion (operating cash flow to net income ~0.40) despite a large TTM free-cash-flow growth spike.

Income Statement

Positive

Teradyne's income statement shows a mixed performance. The TTM data indicates a modest revenue growth rate of 1.13%, which is a positive sign after previous periods of decline. Gross profit margin remains strong at approximately 58.9%, and the net profit margin is healthy at 15.49%. However, there is a noticeable decline in EBIT and EBITDA margins compared to previous years, indicating potential challenges in operational efficiency.

Balance Sheet

Positive

The balance sheet is robust with a low debt-to-equity ratio of 0.0678, indicating conservative leverage. The equity ratio is strong, reflecting a solid capital structure. However, the return on equity has significantly decreased to 0.0446% in the TTM, suggesting reduced profitability from equity investments.

Cash Flow

Positive

Cash flow analysis shows a significant increase in free cash flow growth at 40659.46% in the TTM, indicating improved cash generation. However, the operating cash flow to net income ratio has decreased to 0.395, suggesting less efficient conversion of income into cash. The free cash flow to net income ratio remains stable at 0.59, reflecting consistent cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.86B	2.82B	2.68B	3.16B	3.70B	3.12B
Gross Profit	1.68B	1.65B	1.54B	1.87B	2.21B	1.79B
EBITDA	644.25M	732.41M	640.26M	954.78M	1.30B	1.05B
Net Income	443.08M	542.37M	448.75M	715.50M	1.01B	784.15M
Balance Sheet
Total Assets	3.96B	3.71B	3.49B	3.50B	3.81B	3.65B
Cash, Cash Equivalents and Short-Term Investments	297.72M	599.67M	819.73M	894.38M	1.37B	1.44B
Total Debt	68.75M	76.62M	82.61M	132.88M	184.58M	472.76M
Total Liabilities	1.25B	889.42M	960.93M	1.05B	1.25B	1.44B
Stockholders Equity	2.72B	2.82B	2.53B	2.45B	2.56B	2.21B
Cash Flow
Free Cash Flow	456.83M	474.08M	425.59M	414.67M	965.89M	683.96M
Operating Cash Flow	675.33M	672.18M	585.23M	577.92M	1.10B	868.93M
Investing Cash Flow	-375.15M	-622.34M	-179.65M	43.75M	120.36M	-569.79M
Financing Cash Flow	-524.62M	-251.77M	-501.91M	-892.99M	-1.01B	-158.29M

Teradyne Technical Analysis

Technical Analysis Sentiment

Positive

Last Price249.53

Price Trends

50DMA

206.28

Positive

100DMA

176.74

Positive

200DMA

134.53

Positive

Market Momentum

MACD

11.85

Negative

RSI

68.24

Neutral

STOCH

78.65

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TER, the sentiment is Positive. The current price of 249.53 is above the 20-day moving average (MA) of 231.09, above the 50-day MA of 206.28, and above the 200-day MA of 134.53, indicating a bullish trend. The MACD of 11.85 indicates Negative momentum. The RSI at 68.24 is Neutral, neither overbought nor oversold. The STOCH value of 78.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TER.

Teradyne Risk Analysis

Teradyne disclosed 36 risk factors in its most recent earnings report. Teradyne reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Teradyne Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ON	73 Outperform	$24.10B	80.29	3.87%	―	-16.13%	-81.06%
TER	71 Outperform	$37.75B	87.73	15.77%	0.24%	4.56%	-15.44%
ASX	69 Neutral	$41.09B	36.54	11.16%	2.29%	8.01%	10.41%
ENTG	68 Neutral	$17.90B	62.23	7.71%	0.47%	0.59%	25.65%
AMKR	66 Neutral	$11.95B	38.95	7.27%	0.81%	0.13%	-16.17%
STM	64 Neutral	$25.12B	146.33	0.93%	1.28%	-17.33%	-76.71%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

* Technology Sector Average

Performance Comparison

TER

Teradyne

249.53

138.35

124.44%

ASX

ASE Technology Holding Co

19.41

9.78

101.64%

AMKR

Amkor

48.20

24.28

101.51%

ENTG

Entegris

119.48

18.72

18.58%

ON Semiconductor

61.53

10.95

21.65%

STM

STMicroelectronics

28.77

6.65

30.06%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Dec 09, 2025