Teradyne (TER) AI Stock Analysis

Compare

3,681 Followers

Top Page

Teradyne

(NASDAQ:TER)

Select Model

Outperform 77 (OpenAI - 5.2)

Rating:77Outperform

Price Target:

$369.00

▲(15.86% Upside)

Action:ReiteratedDate:02/05/26

The score is driven by strong financial quality (profitability and low leverage) and very bullish technical momentum. This is tempered by weaker 2025 cash flow conversion and a demanding valuation (high P/E, low yield), while the earnings call adds support via strong AI-led guidance but with visibility and concentration risks.

Positive Factors

Conservative balance sheet & healthy ROE

Low leverage and sizable equity provide durable financial flexibility, supporting capital allocation during cycles. Healthy ROE (~18–20%) indicates efficient capital use, enabling sustained buybacks, opportunistic M&A or R&D investments without jeopardizing solvency over the next several quarters.

AI-driven, growing Semiconductor Test demand

Structural AI data-center demand and a strong backlog underpin repeatable, high-margin equipment cycles for semiconductor test. This broadens secular TAM exposure and supports multi-quarter revenue visibility, helping sustain higher utilization and follow-on services and content revenue over 2–6 months.

Consistent cash generation and shareholder returns

Reliable operating cash flow and material free cash flow support durable capital returns and strategic reinvestment. Strong buybacks and liquidity management demonstrate management prioritizes shareholder value while retaining capacity for targeted M&A or R&D to sustain competitive positions.

Negative Factors

Revenue lumpiness & customer concentration

Dependence on a few large programs and customers creates material sequencing risk: single program ramps or pauses can swing quarterly results and capex timing. This amplifies forecast uncertainty and can disrupt operational cadence and service/upgrade revenue in the medium term.

Weakened cash conversion in 2025

Lower cash conversion reduces internal funding for capex, M&A, and returns, making the company more sensitive to working-capital swings. If cyclical demand softens, reduced conversion and slightly lower FCF constrain flexibility and increase reliance on external financing or slower buybacks.

Concentration on AI data-center and timing risk from merchant GPUs

Heavy exposure to AI data-center end markets concentrates revenue and cyclicality risk; delayed or lower-than-expected merchant GPU ramps would compress anticipated upside. Execution and timing uncertainty for these key programs could meaningfully affect multi-quarter revenue pacing and margin realization.

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

Market Cap

$49.30B

Dividend Yield0.24%

Average Volume (3M)3.40M

Price to Earnings (P/E)90.7

Beta (1Y)1.80

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. Volume2,911,811

30 Day Avg. Volume3,400,275

Financial Highlights & Ratios

PEG Ratio23.29

Price to Book (P/B)10.83

Price to Sales (P/S)9.49

P/FCF Ratio67.22

Enterprise Value/Market Cap1.03

Enterprise Value/Revenue15.90

Enterprise Value/Gross Profit27.26

Enterprise Value/Ebitda65.05

Forecast

1Y Price Target

$298.00

Price Target Upside-6.44% Downside

Rating ConsensusModerate Buy

Number of Analyst Covering19

EPS Forecast (FY)6.33

Revenue Forecast (FY)$4.19B

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 Segment

Revenue by Segment
Highlights income from different business units, shedding light on which segments drive growth and profitability, and where the company might face challenges.

Chart InsightsTeradyne's Semiconductor Test segment is experiencing a resurgence, driven by robust AI demand, with significant revenue growth in recent quarters. Despite challenges in the mobile and auto industrial sectors, the company’s strategic focus on AI-related opportunities is paying off, as evidenced by strong Q3 results and optimistic Q4 guidance. However, the Robotics segment remains flat, highlighting potential risks if AI-driven growth doesn't offset weaknesses in other areas. Investors should watch for continued AI demand to sustain this momentum amid rising operating expenses and low free cash flow.

Data provided by:

The Fly

Teradyne Earnings Call Summary

Earnings Call Date:Feb 02, 2026

(Q4-2025)

% Change Since: |

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

Strong profitability and a conservative balance sheet support resilience (low leverage, healthy ROE), and revenue rebounded in 2025. The main offset is weaker cash conversion in 2025 (OCF and FCF covering a lower share of net income) and a notable step-up in debt, even if leverage remains low.

Income Statement

Positive

Revenue rebounded in 2025 (+11.6% YoY) after a downcycle in 2022–2023, showing improving demand. Profitability remains strong with ~58–59% gross margin and ~17–19% net margin in 2023–2025, but margins are still well below the 2020–2021 peak (net margin ~25–27% and higher operating margins). Overall: solid earnings power and recovery momentum, with some evidence of post-peak normalization in profitability.

Balance Sheet

Very Positive

The balance sheet is conservatively levered, with low debt relative to equity (debt-to-equity ~0.05–0.12 from 2023–2025). Shareholders’ equity is sizable (~$2.8B in 2024–2025) and returns on equity are healthy (~18–20% recently), though down from the exceptionally strong 2020–2021 levels. Key watch item: total debt increased notably in 2025 versus 2024, even though leverage remains low overall.

Cash Flow

Positive

Cash generation is positive and consistent, with operating cash flow around ~$585–$674M in 2023–2025 and free cash flow ~$426–$474M. However, cash conversion has weakened: in 2025, operating cash flow covered only ~61% of net income and free cash flow was ~67% of net income (both below prior years). Free cash flow also dipped slightly in 2025 (about -1.4% YoY), indicating some working-capital or investment-related drag despite stable profitability.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	3.19B	2.82B	2.68B	3.16B	3.70B
Gross Profit	1.87B	1.65B	1.54B	1.87B	2.21B
EBITDA	779.98M	732.41M	640.26M	954.78M	1.30B
Net Income	554.05M	542.37M	448.75M	715.50M	1.01B
Balance Sheet
Total Assets	4.17B	3.71B	3.49B	3.50B	3.81B
Cash, Cash Equivalents and Short-Term Investments	322.00M	599.67M	819.73M	894.38M	1.37B
Total Debt	347.14M	134.54M	147.71M	197.06M	240.76M
Total Liabilities	1.37B	889.42M	960.93M	1.05B	1.25B
Stockholders Equity	2.80B	2.82B	2.53B	2.45B	2.56B
Cash Flow
Free Cash Flow	450.41M	474.08M	425.59M	414.67M	965.89M
Operating Cash Flow	674.41M	672.18M	585.23M	577.92M	1.10B
Investing Cash Flow	-368.62M	-622.34M	-179.65M	43.75M	120.36M
Financing Cash Flow	-562.25M	-251.77M	-501.91M	-892.99M	-1.01B

Teradyne Technical Analysis

Technical Analysis Sentiment

Positive

Last Price318.50

Price Trends

50DMA

240.60

Positive

100DMA

202.00

Positive

200DMA

150.64

Positive

Market Momentum

MACD

24.75

Negative

RSI

68.45

Neutral

STOCH

77.01

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 318.5 is above the 20-day moving average (MA) of 286.35, above the 50-day MA of 240.60, and above the 200-day MA of 150.64, indicating a bullish trend. The MACD of 24.75 indicates Negative momentum. The RSI at 68.45 is Neutral, neither overbought nor oversold. The STOCH value of 77.01 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
TER	77 Outperform	$49.30B	90.73	19.73%	0.24%	4.56%	-15.44%
AMKR	68 Neutral	$11.56B	31.16	8.67%	0.81%	0.13%	-16.17%
ENTG	66 Neutral	$20.05B	85.20	6.16%	0.47%	0.59%	25.65%
ON	64 Neutral	$27.84B	203.98	1.47%	―	-16.13%	-81.06%
STM	64 Neutral	$30.20B	177.18	0.93%	1.28%	-17.33%	-76.71%
ASX	63 Neutral	$49.03B	38.83	12.53%	2.29%	8.01%	10.41%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

* Technology Sector Average

Performance Comparison

TER

Teradyne

318.50

205.34

181.46%

ASX

ASE Technology Holding Co

23.48

13.13

126.93%

AMKR

Amkor

47.07

25.43

117.50%

ENTG

Entegris

136.42

34.56

33.92%

ON Semiconductor

69.47

16.07

30.09%

STM

STMicroelectronics

33.99

6.89

25.42%

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: Feb 05, 2026