Teradyne surges 3.5% on AI-driven earnings beat
Automated test equipment maker crushes quarterly estimates, projects robust 2026 growth on chip testing demand
Teradyne shares climbed 3.5% on Tuesday as the automated test equipment maker delivered a blowout fourth quarter and issued robust first-quarter guidance, positioning itself as a direct beneficiary of the artificial intelligence boom.
The North Reading, Massachusetts-based company reported fourth-quarter revenue of $1.083 billion, a 44% year-over-year increase that shattered analyst expectations of $744 million. Non-GAAP earnings per share of $1.80 more than doubled the Wall Street consensus estimate of $0.79, according to the company's earnings announcement.
"Our Q4 results exceeded our guidance range due to AI-related demand in compute, networking and memory within our Semi Test business," said Teradyne chief executive Greg Smith, who noted the company experienced sequential growth across all business groups: Semi Test, Product Test, and Robotics.
The stock advanced 3.5% on heavy volume, with 6.6 million shares trading hands compared to the company's three-month daily average of 3.7 million. The rally extended Teradyne's gains to more than 20% including after-hours trading, as investors scrambled to reposition for what analysts described as a "reset of the entire forward view" due to underestimated AI-driven demand.
Teradyne's first-quarter 2026 guidance of revenue between $1.15 billion and $1.25 billion and non-GAAP EPS of $1.89 to $2.25 also significantly exceeded Wall Street projections. The company said it anticipates year-over-year growth across all its businesses in 2026, with particular strength in compute driven by AI.
The earnings performance triggered a wave of analyst optimism. UBS maintained a "Buy" rating and lifted its price target to $275 from $200, while Bank of America boosted its target to $260 from $250 and reiterated a Buy rating, according to MarketBeat data. Stifel raised its target to $280 from $270, and Cantor Fitzgerald increased its objective to $270 from $240.
The positive analyst response represents a remarkable turnaround in sentiment. Goldman Sachs upgraded Teradyne from "sell" to "buy" in mid-December, raising its price target from $148 to $230. The current consensus rating stands at "Moderate Buy" with an average price target of $218.06, according to analyst tracking data.
Teradyne's surge reflects a broader rally among companies positioned to benefit from AI infrastructure spending. As semiconductor manufacturers ramp up production of advanced chips designed for AI workloads, demand for sophisticated testing equipment has accelerated. The company's Semiconductor Test segment, which provides equipment to validate chip performance and reliability, has become the primary growth driver.
Despite the strong performance, some analysts caution that Teradyne's valuation reflects heightened expectations. The stock trades at a trailing price-to-earnings ratio of 91.7, significantly above its peer group median, according to analyst commentary. This premium pricing suggests investors are betting on sustained AI test demand rather than a cyclical recovery.
For the full year 2025, Teradyne revenue reached $3.19 billion, a 13% increase from 2024. GAAP net income for the fourth quarter was $257.2 million, or $1.63 per diluted share, while non-GAAP net income was $283.0 million, or $1.80 per diluted share, the company reported.
Looking ahead, investors will be watching whether Teradyne can maintain the momentum across all its business segments, particularly its robotics division, which has faced some headwinds. The company's ability to capture share in the competitive semiconductor test market against rivals such as Advantest and Cohu will also be a key factor in sustaining its growth trajectory.