For Immediate Release

Chicago, IL – May 4, 2026 – Zacks Equity Research shares Teradyne (TER Quick QuoteTER - Free Report) as the Bull of the Day and Qualcomm (QCOM Quick QuoteQCOM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on AppLovin Corp. (APP Quick QuoteAPP - Free Report) , TheTrade Desk (TTD Quick QuoteTTD - Free Report) and Unity Software (U Quick QuoteU - Free Report) .

Here is a synopsis of all five stocks.

Bull of the Day:

Teradyne is a $50 billion maker of automated test equipment and robotics products. Its automatic test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries.

Robotics products include collaborative robotic arms and autonomous mobile robots (“AMRs”) that are used by global manufacturing, logistics and industrial customers.

Teradyne's semiconductor test products are used both for wafer-level and device package testing of semiconductor devices.

AI is Now 70% of Sales

The recent Q1 2026 results from Teradyne showcase a company that has successfully pivoted from a cyclical chip-tester to a cornerstone of the global AI infrastructure buildout.

Despite a knee-jerk market reaction to "lumpy" ordering patterns, the fundamental bullish case is stronger than ever.

Record-Breaking Financial Momentum

Teradyne's Q1 2026 was nothing short of historic. The company shattered the high end of its own guidance, signaling that the "AI supercycle" is moving faster than even management anticipated.

Revenue Growth: $1.282 billion (up 87% YoY), significantly beating the high end of the $1.15B–$1.25B guidance. AI-related sales were ~70% of revenue and Semiconductor Test revenue topped $1B for first time.

Earnings Power: Non-GAAP EPS of $2.56 crushed consensus estimates of $2.08, representing a staggering 241% YoY increase.

Operating Leverage: Record gross margins of 60.9% and operating margin expansion to 37.5% (from 20.5% a year ago) demonstrate that Teradyne is scaling with elite efficiency.

EPS estimates were already moving up before earnings, but since the print last Tuesday, analysts hiked the TER consensus sharply higher with the full-year jumping over 13% from $6.22 to $7.05.

The 2026 topline is projected to approach $4.5 billion, representing 39.5% growth, and next year is expected to cross $5.3 billion for another 20% advance.

And next year's EPS forecast has surged 16.6% in the last 30 days from $7.95 to $9.27. This earnings momentum is precisely why TER is a Zacks #1 Rank.

The AI Infrastructure "Must-Have"

The most compelling aspect of the TER story is its increasing concentration in high-value AI workloads. AI-driven revenue now accounts for approximately 70% of total sales, up from 60% just last quarter.

1) Wafer-to-Data-Center Strategy: Teradyne is no longer just testing consumer chips; it is the gatekeeper for AI GPUs, high-bandwidth memory (HBM), and complex ASICs. As AI chip complexity increases, "test intensity" rises, forcing customers to buy more high-end testers like the UltraFLEXplus.

2) Memory Supercycle: With the surge in HBM demand for AI servers, Teradyne’s memory test business is seeing a massive tailwind that is largely independent of the broader (and often sluggish) smartphone and PC markets.

3) Robotics Recovery: While Semiconductor Test is the current engine, the Robotics segment (Universal Robots and MiR) grew to $91 million in Q1. As labor shortages persist and AI-integrated "cobots" become more capable, this segment offers a high-margin "second act" for the 2027–2030 horizon.

Forward Guidance & Valuation Realignment

Management’s Q2 2026 guidance remains robust, projecting revenue of $1.15B–$1.25B and non-GAAP EPS of $1.86–$2.15. While some investors fear a "digestion phase," the rapid shift in revenue mix toward 70%+ AI suggests we are seeing a structural shift, not a temporary peak.

The Opportunity: TER shares sold off 19% the day after the report and smart investors are taking advantage. The 18% post-earnings dip creates a rare valuation dislocation. At a forward PEG ratio near 1.0 (when factoring in 50%+ EPS growth), TER is arguably undervalued relative to its dominant market position and $6 billion long-term revenue target.

But the crowd is still sleeping here and Friday's close under $350 still offers opportunity. Previously "neutral" JPMorgan analyst Samik Chatterjee upgraded TER on April 30 to Overweight and raised his price target to $400 with these comments...

"We were on the sidelines on TER shares starting the year and heading into the print, with the premium valuation leaving limited room for upsides to elevated buy-side expectations, which were embedding sequential rises in demand through the year rather than appreciating the lumpiness in customer buying. However, the pullback offers materially higher upside for the shares on a largely unchanged revenue trajectory in our expectations, with moderation in revenues in 2H only reflective of the timing of programs and purchases rather than changing the long-term growth trajectory."

Bottom line: Teradyne is a semi test toll booth for the AI era. If you believe the AI data center buildout has multi-year legs, TER is a high-conviction play on the hardware complexity required to make that future a reality. The current volatility is a gift for investors focused on the fundamental acceleration rather than the "lumpy" quarterly headlines.

Bear of the Day:

Qualcomm delivered another quarterly report card last week telling the same old story: declining hand-set numbers and overall falling sales and profit.

Q2 FY 2026 (ends Sep) non-GAAP earnings of $2.65 per share topped the Zacks Consensus Estimate of $2.57 by 3.1% but declined 7% year over year.

Non-GAAP revenues were $10.60 billion, falling 2% year over year and missing the consensus mark of $10.64 billion 0.2%.

Diversification remained the key positive, with record automotive sales and continued IoT momentum helping offset handset-related pressure tied to a challenging memory environment and cautious build behavior among certain OEMs.

Why the Zacks #5 Rank and Why the 15% Rally?

Since their December quarter report in early February, analysts have been busy lowering EPS estimates and this latest report card was no exception. The full-year consensus has dropped 10% now in the past three months, from $12.14 to $10.93.

FY 2027 EPS estimates (begins October) have been slashed over 13% from $12.75 to $11.03, with another nickel shaved since in the past week.

These dial downs by analysts are the sole reason for the Zacks #5 Rank.

For more on the fundamental business drivers and growth opportunities, see this article from last week...

Qualcomm Surpasses Q2 Earnings Estimates on Solid Auto, IoT Demand

But why did shares pop 15% the day after earnings?

It's a classic example of "looking through" soft current numbers to a high-growth future.

While total revenue fell 3% year-over-year and Q3 guidance came in below analyst expectations—investors aggressively pivoted to the "AI infrastructure" story for three primary reasons:

1. The "Leading Hyperscaler" Custom Silicon Win

The single biggest catalyst was CEO Cristiano Amon’s confirmation that Qualcomm has secured a "leading hyperscaler" (undisclosed, but likely Microsoft, Google, or Meta) for its custom data center silicon.

The Impact: This validates Qualcomm’s ability to compete in the data center market using its Oryon CPU cores.

Timeline: Initial shipments are scheduled for the December quarter, marking the first time Qualcomm will generate meaningful revenue from the "AI buildout" beyond the edge (handsets/PCs).

2. Automotive is the New Growth Engine

While the handset market remains stagnant (down 4% this quarter due to China inventory builds), the Automotive segment hit record revenue of $1.3 billion (up 38% YoY).

Qualcomm is now on track to exit 2026 with an annualized revenue run rate of over $6 billion for its Snapdragon Digital Chassis.

Investors are beginning to value QCOM as a diversified "auto-tech" play rather than just a smartphone chip supplier.

3. The "AI PC" and Agentic AI Roadmap

The market is increasingly optimistic about the Snapdragon X2 platform. Qualcomm claims its NPU (Neural Processing Unit) outperforms Intel’s latest "Panther Lake" chips by nearly 30% in on-device token generation.

Management’s commentary on "Agentic AI"—where AI agents run locally on PCs and smart glasses—suggests a higher-margin replacement cycle for hardware starting in late 2026.

Financial "Sugar High" and Shareholder Returns

There were two technical factors that fueled the buying frenzy:

The $20 Billion Buyback: Qualcomm authorized a massive new $20 billion share repurchase program, signaling confidence in its cash flow.

The EPS "Artifact": Headline earnings per share (EPS) surged 173% to $6.88. However, this was largely due to a $5.7 billion one-time tax benefit. While "low quality" earnings, the massive net income boost allowed for the aggressive buyback authorization.

Bottom line: I'm actually a big fan of Cristiano Amon and his efforts to turn QCOM into a key provider of intelligent systems at "the edge" for IoT, robotics, automotive and the billions of new "Physical-AI" devices that will need custom silicon solutions. I wrote about it here on my blog in January: Qualcomm Came to Play: 7 Product Releases at CES.   

Additional content:

AppLovin Corp. has emerged as one of the most powerful players in the digital advertising ecosystem, combining AI-driven optimization with a highly efficient marketplace model. As the company builds momentum into 2026, investors are weighing its exceptional profitability and growth potential against lingering uncertainties around transparency and scaling new verticals.

Marketplace Strength Driving Momentum

AppLovin’s integrated marketplace continues to deliver strong results. Its MAX platform, paired with Axon 2.0 AI enhancements, is improving bid density and advertiser matching. This has translated into solid operating momentum through late 2025, with management expressing confidence in continued sequential growth into early 2026 despite typical seasonal softness.

A major long-term opportunity lies in improving conversion rates. Management believes these can gradually move toward roughly 5% from historical low single-digit levels. This would be driven by better AI models and increased advertiser diversity, especially beyond gaming. As more bidders enter the ecosystem, AppLovin benefits from take-rate mechanics, even on lower-value impressions, supporting steady share gains.

Industry-Leading Margins and Cash Flow

One of AppLovin’s biggest strengths is profitability. The company reported an adjusted EBITDA margin of about 84% in the fourth quarter of 2025, alongside free cash flow of roughly $1.3 billion. This highlights strong operating leverage and efficient cost management.

Management expects similar margin levels in the first quarter of 2026, signaling durability even as the business expands into new verticals. Importantly, any increase in performance marketing spend is expected to remain ROI-driven, with early tests showing quick payback periods.

E-Commerce Expansion as a Growth Catalyst

AppLovin is increasingly targeting web and e-commerce advertisers. Its self-serve Axon Ads platform is currently referral-only but is expected to become widely available in the first half of 2026.

Generative AI features, including an interactive page generator and upcoming video ad tools, are designed to streamline onboarding and boost campaign performance.

This push into e-commerce could significantly expand AppLovin’s addressable market, helping it compete more directly with The Trade Desk in broader digital advertising while reducing reliance on gaming. Still, Unity Software remains a massive competitor within the gaming ecosystem, making diversification crucial for AppLovin’s long-term growth.

Capital Allocation and Shareholder Returns

Strong cash generation enables AppLovin to balance growth investments with shareholder returns. The company ended 2025 with solid liquidity and continues to execute share buybacks aggressively, reflecting confidence in its long-term outlook.

This disciplined capital allocation strategy supports per-share value growth while maintaining flexibility to invest in AI and platform expansion. Over the past year, the stock has surged significantly, reflecting investor optimism around its execution.

Key Risks to Consider

Despite its strengths, AppLovin faces notable challenges.

First, its e-commerce initiative is still in the early stages. Referral-only access and onboarding friction limit scale, and generative tools are still being tested. This could slow diversification in the near term.

Second, the company does not disclose revenues by vertical, making it difficult for investors to assess progress in reducing reliance on gaming.

Third, AppLovin has not provided full-year guidance for 2026. While the short-term outlook remains strong, the absence of long-term visibility may lead to increased stock volatility as investors react to quarterly results.

How AppLovin Compares with Key U.S. Peers

TheTrade Desk operates a demand-side platform focused on programmatic advertising, with a strong focus on data-driven targeting. While The Trade Desk benefits from premium brand exposure, its margin profile is more sensitive to advertising cycles than AppLovin. The Trade Desk emphasizes reach and transparency, whereas AppLovin emphasizes performance. As a result, TTD competes more on scale than efficiency.

Unity Software also intersects with advertising through its real-time 3D and monetization tools. However, Unity Software’s ad business is closely tied to developer ecosystems and remains more volatile. Unlike AppLovin, Unity Software is still balancing growth with profitability, making AppLovin’s margin stability a key differentiator among these peers.

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