Teradyne
TER
$403.56
+10.32%
Teradyne, Inc. is a leading supplier of automated test equipment for the semiconductor industry, along with system testing for hard disk drives, circuit boards, and wireless devices, and it also provides collaborative and autonomous robots for industrial automation. The company holds a dominant market position in semiconductor test equipment, serving vertically integrated, fabless, and foundry chipmakers, and has expanded into robotics since 2015. Currently, the stock is in the spotlight due to surging demand for AI and memory chips, which has driven record quarterly results and a massive rally, but also raises concerns about sustainability and valuation. Recent news highlights Teradyne's Q2 earnings beat and strong guidance, while also noting profit-taking and market-wide semiconductor volatility, making the narrative one of high growth tempered by cyclicality and valuation risk.…
TER
Teradyne
$403.56
Related headlines
Investment Opinion: Should I buy TER Today?
Rating: Buy. Teradyne's dominant position in semiconductor test equipment, combined with explosive AI-driven demand, justifies a positive outlook. The consensus rating is 'Buy' with an average target of $449.80, implying 22.3% upside from the current price of $367.69. The thesis is supported by 87% YoY revenue growth, expanding gross margins to 60.9%, and a forward PE of 31.8x, which is reasonable given the expected earnings growth. However, the stock is not without risks: the high PEG ratio of 23.6x and recent volatility suggest that any disappointment could lead to a sharp selloff. This Buy rating would be downgraded if revenue growth decelerates below 30% or if gross margins fall below 55%. Conversely, it could be upgraded if the stock pulls back to a forward PE below 25x while growth remains robust. Overall, Teradyne is fairly valued relative to its growth prospects, but investors should be prepared for significant volatility.
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TER 12-Month Price Forecast
The AI-driven semiconductor upcycle is a powerful tailwind for Teradyne, and the company's dominant position makes it a prime beneficiary. However, the high valuation and cyclicality warrant caution. The stance is bullish but with medium confidence, as the sustainability of the growth rate is uncertain. If revenue growth continues above 50% and margins hold, the stock could reach new highs. Conversely, any signs of demand softening or margin compression would lead to a downgrade to neutral.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Teradyne's 12-month outlook, with a consensus price target around $449.80 and implied upside of +11.5% versus the current price.
Average Target
$449.80
0 analysts
Implied Upside
+11.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$350 - $550
Analyst target range
The target price range spans from a low of $350.00 to a high of $550.00, indicating a wide dispersion of views. The high target of $550 implies a 49.6% upside from the current price, likely assuming continued strong demand for AI-related test equipment and potential market share gains. The low target of $350 is slightly below the current price, suggesting some analysts see downside risk from a potential semiconductor cycle downturn or margin pressure. The wide spread between the low and high targets (57% of the average) reflects high uncertainty about the sustainability of the current growth rate. Recent institutional ratings show a notable upgrade from JP Morgan (from Neutral to Overweight) on April 30, 2026, while other firms have maintained their positive ratings, indicating a generally constructive but cautious outlook.
Bulls vs Bears: TER Investment Factors
Teradyne presents a classic high-growth, high-valuation dilemma. The bull case is compelling: explosive revenue growth, dominant market share, and strong profitability, all backed by AI-driven demand. However, the bear case is equally strong: extreme valuation multiples, cyclicality, and recent volatility signal that the market is pricing in perfection. Currently, the bull side has stronger evidence given the unprecedented growth trajectory and analyst upgrades, but the single most important tension is whether the AI-driven semiconductor upcycle is sustainable. If memory chip demand continues to surge, the stock could reach new highs; if it falters, the high valuation could lead to a severe correction.
Bullish
- Explosive Revenue Growth: Q1 2026 revenue surged 87.04% YoY to $1.282B, a dramatic acceleration from the prior year's levels. This growth is driven by robust demand for memory chip testing, a key AI-related tailwind that positions Teradyne at the forefront of the semiconductor upcycle.
- Dominant Market Position: Teradyne holds a leading share in semiconductor test equipment, serving major chipmakers. Its entrenched position and high barriers to entry provide a durable competitive advantage, ensuring it captures a significant portion of AI-driven capital spending.
- Strong Profitability Metrics: Gross margin expanded to 60.9% in Q1 2026, up from 57.2% a year earlier, while operating margin reached 36.9%. This demonstrates excellent operational leverage and pricing power, translating top-line growth into even faster profit growth.
- Analyst Optimism and Upgrades: The consensus rating is 'Buy' with an average target of $449.80, implying 22.3% upside. Notably, JP Morgan upgraded the stock to Overweight on April 30, 2026, reflecting growing institutional confidence in the AI-driven demand story.
Bearish
- Extreme Valuation Premium: Trailing PE stands at 55.5x, and forward PE at 31.8x, well above historical norms. The PEG ratio of 23.6x suggests the stock is priced for perfection, leaving little room for error if growth decelerates or margins compress.
- High Cyclicality Risk: Semiconductor capital spending is notoriously cyclical. With revenue growth of 87% in Q1, the company is likely near a cyclical peak; a downturn in memory chip demand could lead to a sharp revenue decline, as seen in past cycles.
- Recent Volatility and Profit-Taking: The stock plunged 33.98% from its 52-week high of $487.91 to the current $367.69, and dropped 13.96% in the last month. This volatility reflects profit-taking and market concerns about sustainability, as highlighted by Michael Burry's bearish semiconductor bet.
- Guidance and Margin Concerns: Despite strong Q2 results, guidance signaled near-term margin pressure and revenue lumpiness, causing a sharp selloff on April 29. This suggests that the company's growth may not be as smooth as investors hope, and margins could be squeezed by rising costs.
TER Technical Analysis
Teradyne's stock is in a powerful long-term uptrend, with a 1-year price change of +242.26%, far outpacing the S&P 500's +18.19% over the same period. The current price of $367.69 sits at 70.4% of its 52-week range (low of $102.42, high of $487.91), indicating the stock has pulled back significantly from its highs but remains well above its lows. This positioning suggests the stock is in a correction phase within a broader bull market, offering a potential entry point for investors who believe the long-term growth story remains intact, though it also signals that the stock is no longer at its most overbought levels.
Beta
1.79
1.79x market volatility
Max Drawdown
-34.0%
Largest decline past year
52-Week Range
$103-$488
Price range past year
Annual Return
+281.7%
Cumulative gain past year
| Period | TER Return | S&P 500 |
|---|---|---|
| 1m | +9.3% | +3.6% |
| 3m | +5.5% | +5.1% |
| 6m | +48.8% | +13.8% |
| 1y | +281.7% | +22.2% |
| ytd | +94.4% | +13.1% |
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TER Fundamental Analysis
Teradyne's revenue growth has been exceptional, with the most recent quarter (Q1 2026) reporting revenue of $1.282 billion, a YoY increase of 87.04%. This marks a sharp acceleration from prior quarters, where revenue grew from $651.8 million in Q2 2025 to $769.2 million in Q3 2025, then $1.083 billion in Q4 2025, and finally $1.282 billion in Q1 2026. The growth is driven by surging demand for memory chip testing, as highlighted in recent news, and the company's product segment (which includes semiconductor test equipment) contributed $1.143 billion of total revenue, while services added $139.5 million. This trajectory indicates that Teradyne is benefiting from a cyclical upswing in semiconductor capital spending, particularly in AI-related applications, which is a key driver of the investment case.
Quarterly Revenue
$1.3B
2026-03
Revenue YoY Growth
+87.0%
YoY Comparison
Gross Margin
60.9%
Latest Quarter
Free Cash Flow
$553179999.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is TER Overvalued?
Given that Teradyne is profitable with a trailing net income of $398.9 million in Q1 2026, the PE ratio is the appropriate valuation metric. The trailing PE is 55.46x, while the forward PE is 31.83x, implying the market expects significant earnings growth in the next year. The gap between trailing and forward PE suggests that investors are pricing in a substantial increase in earnings, which is consistent with the company's recent growth acceleration. The PEG ratio of 23.64x indicates that the stock is expensive relative to its expected growth rate, but this metric can be misleading for cyclical companies at the peak of an earnings cycle.
PE
55.5x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 16x~49x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
39.5x
Enterprise Value Multiple
Investment Risk Disclosure
Financially, Teradyne carries low debt (debt-to-equity of 0.12) and a current ratio of 1.76, indicating solid liquidity. However, the company's earnings are highly sensitive to semiconductor cycles; Q1 2026 net income of $398.9M was a massive jump from $78.4M in Q2 2025, but such volatility is inherent. The high operating margin of 36.9% could compress if memory chip prices fall or competition intensifies. Additionally, the stock's beta of 1.74 means it is 74% more volatile than the market, amplifying both gains and losses. The payout ratio of 13.8% and dividend yield of 0.25% offer minimal income cushion, making the investment purely growth-driven.
FAQ
The key risks are: 1) Cyclicality: Semiconductor capital spending is highly cyclical, and a downturn could cause a sharp revenue decline, as seen in past cycles. 2) Valuation: The high PE and PEG ratios leave little margin for error; any disappointment could trigger a selloff. 3) Competition: Rivals like Advantest could gain share, especially in memory testing. 4) Macro risks: With a beta of 1.74, the stock is highly sensitive to market swings, and a broader tech selloff could amplify losses. The most severe risk is a combination of a semiconductor downturn and valuation compression, which could lead to a 30-40% drop from current levels.
The 12-month forecast is bullish but with significant uncertainty. In the bull case (30% probability), the stock could reach $450-$550, driven by sustained AI demand. In the base case (50% probability), it could trade in the $400-$450 range, reflecting moderate growth and stable margins. In the bear case (20% probability), it could fall to $300-$350 if the cycle turns. The most likely scenario is the base case, with the stock ending near the analyst average target of $449.80. Key assumptions include continued memory chip demand and stable margins. Investors should monitor quarterly earnings for signs of growth deceleration.
Teradyne's valuation is stretched relative to its historical averages and the broader market. The trailing PE of 55.5x and forward PE of 31.8x are significantly higher than the S&P 500's average, and the PEG ratio of 23.6x suggests the stock is overvalued even when accounting for growth. However, the market is pricing in exceptional earnings growth, which is justified by the 87% YoY revenue surge. Compared to peers, Teradyne trades at a premium, reflecting its leadership in AI test equipment. The valuation implies that investors expect the current growth rate to continue for several years, which is a high bar. If growth decelerates, the stock could face a de-rating.
Teradyne is a good buy for investors who believe in the long-term AI-driven semiconductor growth story and can tolerate high volatility. The stock has 22.3% upside to the average analyst target of $449.80, and the company's dominant market position provides a strong competitive moat. However, the trailing PE of 55.5x and PEG of 23.6x indicate that the stock is priced for perfection, leaving little room for error. If you have a high risk tolerance and a 3-5 year horizon, TER could be a rewarding investment, but it is not suitable for conservative investors or those seeking income, given the low dividend yield of 0.25%.
Teradyne is better suited for long-term investment, given its high volatility (beta 1.74) and cyclical nature. Short-term trading is risky due to the stock's 13.96% drop in the last month and its sensitivity to market sentiment. For long-term investors, the company's dominant position in AI test equipment provides a strong growth runway, but they must be prepared for significant drawdowns, as evidenced by the 33.98% max drawdown. A minimum holding period of 3-5 years is recommended to ride out cyclical downturns and capture the full AI-driven growth cycle. The low dividend yield means returns will come primarily from capital appreciation.