Teradyne’s fourth quarter was marked by strong top-line growth and an 11% revenue beat versus Wall Street expectations, leading to a significant positive market reaction. Management attributed this performance to a surge in demand for semiconductor and robotics testing solutions, particularly driven by AI data center buildouts. CEO Gregory Smith highlighted that "AI demand drove more than 60% of our revenue" in the quarter, with the Semiconductor Test, Product Test, and Robotics groups all posting double-digit sequential growth. The company also cited ongoing market share gains in high-bandwidth memory (HBM) and compute testing, as well as successful integration of recent acquisitions, as key contributors.
Is now the time to buy TER? Find out in our full research report (it’s free for active Edge members).
Teradyne (TER) Q4 CY2025 Highlights:
- Revenue: $1.08 billion vs analyst estimates of $975.6 million (43.9% year-on-year growth, 11% beat)
- Adjusted EPS: $1.80 vs analyst estimates of $1.38 (30.1% beat)
- Adjusted EBITDA: $346 million vs analyst estimates of $286.5 million (31.9% margin, 20.7% beat)
- Revenue Guidance for Q1 CY2026 is $1.2 billion at the midpoint, above analyst estimates of $954 million
- Adjusted EPS guidance for Q1 CY2026 is $2.07 at the midpoint, above analyst estimates of $1.26
- Operating Margin: 27.1%, up from 20.4% in the same quarter last year
- Inventory Days Outstanding: 75, down from 104 in the previous quarter
- Market Capitalization: $47 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Teradyne’s Q4 Earnings Call
- C.J. Muse (Cantor Fitzgerald) asked about the sustainability of first-half weighted sales and overall revenue growth. CFO Michelle Turner explained that strong backlog and improved forecasting support first-half strength, but quarterly lumpiness is likely due to program timing.
- Timothy Arcuri (UBS) questioned whether the new target model implied meaningful Semi Test share gains. CEO Gregory Smith clarified that while share is expected to rise in compute, overall market share increases will be incremental, not dramatic, given the current market structure.
- Mehdi Hosseini (SIG) probed the potential for increased VIP compute market share as custom ASIC adoption broadens. Smith responded that the competitive landscape remains dynamic, with share likely to fluctuate quarter to quarter.
- Sreekrishnan Sankarnarayanan (TD Cowen) inquired about market share expectations for GPU testing and the impact on broader ASIC share. Smith stated that merchant GPU gains will start in single digits but could rise over time, with material revenue impact expected in the second half of 2026.
- James Schneider (Goldman Sachs) asked about ATE total addressable market (TAM) growth and the achievability of the $6 billion revenue model. Smith said the model is balanced and hinges on continued AI infrastructure investment, but growth rates will depend on external conditions and customer adoption.
Catalysts in Upcoming Quarters
Looking ahead, our team will be monitoring (1) the pace of AI-driven demand and potential customer concentration risks in compute and memory testing; (2) the progress and revenue contribution from the MultiLane joint venture and robotics expansion, particularly in e-commerce applications; and (3) signs of market share gains in system-level and photonic test segments. Execution on backlog conversion and the ability to navigate quarterly sales lumpiness will also be key indicators of performance.
Teradyne currently trades at $300.07, up from $249.53 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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