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Can Strong Semiconductor Test Segment Push Teradyne Stock Higher?
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Key Takeaways
Teradyne's Q3 Semiconductor Test revenue rose 7% YoY to $606M, driving 78.8% of total sales.
AI-driven demand, especially from Cloud AI and DRAM testing, boosted Semiconductor Test growth.
Teradyne guided Q4 2025 revenue of $920M-$1B, above consensus, on continued AI-related demand.
Teradyne’s (TER - Free Report) third-quarter 2025 Semiconductor Test revenues of $606 million missed the Zacks Consensus Estimate by 2.71%. Semiconductor Test revenues rose 7% year over year and 23% sequentially, accounting for 78.8% of sales in the reported quarter.
In the reported quarter, Teradyne’s adjusted earnings of 85 cents per share beat the Zacks Consensus Estimate by 8.97%. The earnings figure decreased 5.6% year over year.
Net sales increased 4.3% year over year to $769 million, beating the consensus mark by 3.32%.
Click here to check the details of Teradyne’s third-quarter 2025 results.
TER shares have rallied 20.5% following the third-quarter results. TER returned 38.2% in the year-to-date period compared with the Zacks Computer and Technology sector’s appreciation of 29.6%.
AI Demand Drives Strong Growth in TER’s Semiconductor Test
Teradyne’s Semiconductor Test revenue performed well in the reported quarter, primarily due to the continued strong demand from Cloud AI, which was the key driver of growth in the Semiconductor Test business. The company’s UltraFLEXplus system, specifically designed for high-performance processors and networking devices, played an important role in addressing the demanding requirements of AI devices, such as power, pin count and test data.
This surge in demand was further supported by AI-driven advancements, particularly in AI accelerator Application-Specific Integrated Circuits, networking, and high-bandwidth memory (HBM) and Dynamic Random-Access Memory (DRAM), which significantly boosted the need for test equipment.
Memory test sales contributed significantly to growth of the Semiconductor Test segment. In the third quarter of 2025, memory test revenue more than doubled sequentially, reaching $128 million, with 75% of the revenues driven by DRAM and 25% by flash memory for cloud SSD applications. The demand for DRAM was primarily fueled by final tests of DRAM and HBM performance tests, which are critical for AI applications.
The System on Chip (SoC) segment also played a crucial role in boosting the Semiconductor Test segment’s performance. SoC sales increased 11% quarter over quarter and 12% year over year, primarily due to the growing demand for AI-related applications.
The Integrated System Test segment contributed to the overall growth, with sales increasing 9% quarter over quarter and an impressive 46% year over year. This growth was fueled by strong demand for HDD and Mobile/Compute System Level Test solutions.
TER’s Growth Impacted by Weak Demand, Higher Costs
Teradyne’s robust and diversified portfolio is continuously contributing to its growth prospects and driving top-line growth.
However, Teradyne’s performance was hurt by weaker-than-expected demand in the industrial automation and robotics markets and higher operating expenses, particularly in engineering spending for semiconductor testing.
TER’s Initiates Positive Q4 Guidance
For the fourth quarter of 2025, Teradyne expects revenues between $920 million and $1 billion, driven by strong AI-related demand in compute, networking, and memory segments.
Non-GAAP earnings are expected to be between $1.20 and $1.46 per share.
The Zacks Consensus Estimate for fourth-quarter 2025 revenues is pegged at $815.84 million, suggesting an 8.36% increase year over year.
The consensus mark for earnings is pegged at $1.02 per share, which has increased 2.97% over the past 30 days. This indicates growth of 7.37% on a year-over-year basis.
The Zacks Consensus Estimate for 2025 revenues is pegged at $2.90 billion, suggesting a 2.76% increase year over year.
The consensus mark for earnings is pegged at $3.14 per share, which has increased by a penny over the past 30 days. This indicates a decline of 2.48% on a year-over-year basis.
Image: Bigstock
Can Strong Semiconductor Test Segment Push Teradyne Stock Higher?
Key Takeaways
Teradyne’s (TER - Free Report) third-quarter 2025 Semiconductor Test revenues of $606 million missed the Zacks Consensus Estimate by 2.71%. Semiconductor Test revenues rose 7% year over year and 23% sequentially, accounting for 78.8% of sales in the reported quarter.
In the reported quarter, Teradyne’s adjusted earnings of 85 cents per share beat the Zacks Consensus Estimate by 8.97%. The earnings figure decreased 5.6% year over year.
Net sales increased 4.3% year over year to $769 million, beating the consensus mark by 3.32%.
Click here to check the details of Teradyne’s third-quarter 2025 results.
Teradyne, Inc. Revenue (TTM)
Teradyne, Inc. revenue-ttm | Teradyne, Inc. Quote
TER shares have rallied 20.5% following the third-quarter results. TER returned 38.2% in the year-to-date period compared with the Zacks Computer and Technology sector’s appreciation of 29.6%.
AI Demand Drives Strong Growth in TER’s Semiconductor Test
Teradyne’s Semiconductor Test revenue performed well in the reported quarter, primarily due to the continued strong demand from Cloud AI, which was the key driver of growth in the Semiconductor Test business. The company’s UltraFLEXplus system, specifically designed for high-performance processors and networking devices, played an important role in addressing the demanding requirements of AI devices, such as power, pin count and test data.
This surge in demand was further supported by AI-driven advancements, particularly in AI accelerator Application-Specific Integrated Circuits, networking, and high-bandwidth memory (HBM) and Dynamic Random-Access Memory (DRAM), which significantly boosted the need for test equipment.
Memory test sales contributed significantly to growth of the Semiconductor Test segment. In the third quarter of 2025, memory test revenue more than doubled sequentially, reaching $128 million, with 75% of the revenues driven by DRAM and 25% by flash memory for cloud SSD applications. The demand for DRAM was primarily fueled by final tests of DRAM and HBM performance tests, which are critical for AI applications.
The System on Chip (SoC) segment also played a crucial role in boosting the Semiconductor Test segment’s performance. SoC sales increased 11% quarter over quarter and 12% year over year, primarily due to the growing demand for AI-related applications.
The Integrated System Test segment contributed to the overall growth, with sales increasing 9% quarter over quarter and an impressive 46% year over year. This growth was fueled by strong demand for HDD and Mobile/Compute System Level Test solutions.
TER’s Growth Impacted by Weak Demand, Higher Costs
Teradyne’s robust and diversified portfolio is continuously contributing to its growth prospects and driving top-line growth.
However, Teradyne’s performance was hurt by weaker-than-expected demand in the industrial automation and robotics markets and higher operating expenses, particularly in engineering spending for semiconductor testing.
TER’s Initiates Positive Q4 Guidance
For the fourth quarter of 2025, Teradyne expects revenues between $920 million and $1 billion, driven by strong AI-related demand in compute, networking, and memory segments.
Non-GAAP earnings are expected to be between $1.20 and $1.46 per share.
The Zacks Consensus Estimate for fourth-quarter 2025 revenues is pegged at $815.84 million, suggesting an 8.36% increase year over year.
The consensus mark for earnings is pegged at $1.02 per share, which has increased 2.97% over the past 30 days. This indicates growth of 7.37% on a year-over-year basis.
The Zacks Consensus Estimate for 2025 revenues is pegged at $2.90 billion, suggesting a 2.76% increase year over year.
The consensus mark for earnings is pegged at $3.14 per share, which has increased by a penny over the past 30 days. This indicates a decline of 2.48% on a year-over-year basis.
Zacks Rank & Other Key Picks
Currently, TER carries a Zacks Rank #2 (Buy).
BILL Holdings (BILL - Free Report) , Advanced Energy (AEIS - Free Report) and Akamai Technologies (AKAM - Free Report) are some other top-ranked stocks that investors can consider in the broader sector. Each stock carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bill Holdings’ shares have plunged 42% in the year-to-date period. BILL is set to report its first-quarter fiscal 2026 results on Nov. 6.
Advanced Energy is set to report third-quarter 2025 results on Nov. 4. Advanced Energy shares have surged 79.9% year to date.
Akamai Technologies is set to report third-quarter 2025 results on Nov. 6. Akamai Technologies shares have plunged 23.7% year to date.