Teradyne TER is benefiting from a powerful surge in its semiconductor test segment, fueled by the global build-out of AI data centers and the resulting demand for advanced compute and memory technologies. In the second quarter of 2026, Teradyne reported record revenues exceeding $1.3 billion, more than doubling year over year.
The Semi Test group, which includes System-on-Chip (SOC), memory, and storage test, was a standout performer, clearing the $1 billion mark for the second consecutive quarter. SOC revenues alone reached $843 million, with compute products heavily tied to AI making up 70% of that and growing nearly 600% year over year. This growth is directly linked to the proliferation of AI applications, which are driving increased investment in wafer fabrication and advanced packaging technologies.
Teradyne’s leadership in both SOC and memory test solutions positions it to capture a significant share of this expanding market. The company’s Magnum testers are well-suited for high-bandwidth memory (HBM) and DRAM, which are seeing robust demand due to AI and data center expansion.
In the second quarter of 2026, compute revenues within SOC grew nearly 600% year over year, and memory test revenues hit a record $212 million, driven by HBM, DRAM and renewed demand for NAND. The company is also making strategic moves in networking and optical test, acquiring Quantifi Photonics and developing new solutions for emerging technologies like co-packaged optics, which is expected to be a $300-$700 million market by 2028.
Teradyne’s strong performance in the semiconductor test segment is underpinned by secular growth drivers in AI, data centers and advanced packaging. For the third quarter of 2026, Teradyne expects revenues in the range of $1.20-$1.30 billion.
Teradyne Suffers From Stiff Competition
Teradyne is facing stiff competition from companies such as Advantest Corporation ATEYY and Cohu COHU. Both Advantest and Cohu are expanding their footprint in the semiconductor test market.
In July 2026, Advantest expanded its SiConic ecosystem with a new Design-for-Test (DFT) Engineering environment, enabling engineers to develop, debug, validate and optimize production-ready test content before deployment to manufacturing. The solution aligns bench workflows with the V93000 platform, accelerating DFT development, improving collaboration and reducing reliance on production automated test equipment.
Cohu received approximately $5 million in multiple orders for its Diamond X platform from a leading semiconductor manufacturer. The systems will support testing of next-generation GaN power devices for AI data centers, strengthening Cohu’s position in AI infrastructure and high-efficiency power semiconductor testing.
TER’s Share Price Performance, Valuation and Estimates
Teradyne shares have surged 65% in the year-to-date period, outperforming the Zacks Computer & Technology sector’s growth of 8.9% and the Zacks Electronics - Miscellaneous Products increase of 39.2%.
TER Stock Performance
Image Source: Zacks Investment Research
TER stock is trading at a premium with a forward 12-month Price/Sales of 9.9X compared with the Electronics - Miscellaneous Products industry’s 8.31X. TER has a Value Score of D.
TER Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $7.20 per share, which has been unchanged over the past 30 days. This suggests 81.82% year-over-year growth.
Teradyne, Inc. Price and Consensus
Teradyne, Inc. price-consensus-chart | Teradyne, Inc. Quote
Teradyne currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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