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TER vs. CSCO: Which AI Infrastructure Stock Is the Better Buy?
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Key Takeaways
Teradyne's AI-driven SemiTest revenues were $1B in Q1 2026, doubling year over year.
Cisco expects about $9B in 2026 AI infrastructure orders from hyperscalers.
TER's 2026 earnings estimate rose 16.8% in 30 days compared with 0.71% growth for CSCO.
Teradyne (TER - Free Report) and Cisco Systems (CSCO - Free Report) are major players in the AI Infrastructure space. While Teradyne supports semiconductor manufacturing through automated chip testing systems, Cisco Systems powers enterprise networking and AI-ready data center connectivity. Both are positioned to benefit from rising AI infrastructure spending.
So, Teradyne or Cisco Systems — Which of these AI Infrastructure stocks has the greater upside potential? Let’s find out.
The Case for TER Stock
Teradyne is benefiting from the growing demand for AI infrastructure, which is driving robust growth across its semiconductor test and robotics divisions. In the first quarter of 2026, the Semiconductor Test (SemiTest) segment alone generated $1.1 billion, breaking the $1 billion threshold for the first time and more than doubling year over year. This segment saw a 26% sequential increase and more than a 100% year-over-year increase.
Growth is largely attributed to the accelerating demand for AI and data center technologies, with AI-related demand accounting for nearly 70% of Teradyne’s revenues in the first quarter of 2026, up from about 60% in the previous quarter. Within the Semi Test, the SoC (System on Chip) product line contributed $882 million, memory test solutions added $203 million and the IST group delivered $27 million. Compute, driven by AI, now represents roughly 75% of SoC product revenue, highlighting a strategic shift from mobile-centric to AI-dominant testing.
Teradyne’s expanding portfolio and strong demand for AI-related applications are expected to drive the company’s top-line growth. For the second quarter of 2026, Teradyne expects revenues in the range of $1.150-$1.250 billion.
The Case for CSCO Stock
Cisco has been integrating AI into its product portfolios across networking, security, collaboration, and observability. Strong demand for Cisco’s products in developing AI infrastructure has been a game-changer for the company.
In the third quarter of fiscal 2026 alone, Cisco secured $1.9 billion in AI infrastructure orders from hyperscalers, up from $600 million the previous year. Year to date, these orders have reached $5.3 billion, already surpassing prior expectations for fiscal 2026. The company now expects approximately $9 billion in AI infrastructure orders from hyperscalers in fiscal 2026, a 4.5 times increase over fiscal 2025. This momentum is further supported by strong growth in Cisco’s Silicon One systems and Acacia Optics, both of which are foundational to high-performance AI networking.
Cisco is seeing triple-digit year-over-year order growth in AI infrastructure from enterprise, sovereign and Neocloud customers, with a growing pipeline of $3 billion. Enterprise data center switching orders, often tied to AI deployments, grew more than 40% year over year, and campus networking orders hit record highs. The company’s next-generation networking products, including WiFi 7 and industrial IoT solutions, are also experiencing rapid adoption as organizations modernize their networks to handle the increased traffic and complexity brought by AI workloads.
Price Performance and Valuation of TER and CSCO
In the year-to-date period, Teradyne’s and Cisco’s shares have gained 65.8% and 54.3%, respectively. The outperformance in Teradyne can be attributed to strong AI-related demand, which is driving significant investments in cloud AI build-out as customers accelerate production of a wide range of AI accelerators, networking, memory and power devices.
Despite Cisco’s expanding portfolio and partner base, the company is suffering from declining services revenue, flat security product revenue and stiff competition, which are major concerns.
TER and CSCO Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, Teradyne and Cisco's shares are currently overvalued as suggested by a Value Score of F.
In terms of trailing 12-month Price/Sales, Teradyne shares are trading at 10.31X, higher than Cisco’s 7.23X.
TER and CSCO Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for TER & CSCO?
The Zacks Consensus Estimate for Teradyne’s 2026 earnings is currently pegged at $7.09 per share, which has increased 16.8% over the past 30 days. This implies a 79.04% year-over-year rise.
The Zacks Consensus Estimate for Cisco’s 2026 earnings is currently pegged at $4.20 per share, which has increased 0.71% over the past 30 days. This indicates a 10.24% year-over-year rise.
Teradyne earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average surprise of 17.05%. Cisco Systems’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average surprise of 2%. The average surprise of Teradyne is higher than that of Cisco Systems.
Conclusion
While both Teradyne and Cisco stand to benefit from the booming AI Infrastructure boom, Teradyne may offer greater upside potential with a robust AI-driven portfolio and a significantly higher earnings momentum compared to CSCO.
While Cisco remains a strong AI networking player, the company suffers from declines in its prior generation security products and the near-term revenue drag from the transition of its Splunk business from on-premise deals to cloud subscriptions, as well as gross margin headwinds from higher memory costs and product mix.
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Image: Bigstock
TER vs. CSCO: Which AI Infrastructure Stock Is the Better Buy?
Key Takeaways
Teradyne (TER - Free Report) and Cisco Systems (CSCO - Free Report) are major players in the AI Infrastructure space. While Teradyne supports semiconductor manufacturing through automated chip testing systems, Cisco Systems powers enterprise networking and AI-ready data center connectivity. Both are positioned to benefit from rising AI infrastructure spending.
So, Teradyne or Cisco Systems — Which of these AI Infrastructure stocks has the greater upside potential? Let’s find out.
The Case for TER Stock
Teradyne is benefiting from the growing demand for AI infrastructure, which is driving robust growth across its semiconductor test and robotics divisions. In the first quarter of 2026, the Semiconductor Test (SemiTest) segment alone generated $1.1 billion, breaking the $1 billion threshold for the first time and more than doubling year over year. This segment saw a 26% sequential increase and more than a 100% year-over-year increase.
Growth is largely attributed to the accelerating demand for AI and data center technologies, with AI-related demand accounting for nearly 70% of Teradyne’s revenues in the first quarter of 2026, up from about 60% in the previous quarter. Within the Semi Test, the SoC (System on Chip) product line contributed $882 million, memory test solutions added $203 million and the IST group delivered $27 million. Compute, driven by AI, now represents roughly 75% of SoC product revenue, highlighting a strategic shift from mobile-centric to AI-dominant testing.
Teradyne’s expanding portfolio and strong demand for AI-related applications are expected to drive the company’s top-line growth. For the second quarter of 2026, Teradyne expects revenues in the range of $1.150-$1.250 billion.
The Case for CSCO Stock
Cisco has been integrating AI into its product portfolios across networking, security, collaboration, and observability. Strong demand for Cisco’s products in developing AI infrastructure has been a game-changer for the company.
In the third quarter of fiscal 2026 alone, Cisco secured $1.9 billion in AI infrastructure orders from hyperscalers, up from $600 million the previous year. Year to date, these orders have reached $5.3 billion, already surpassing prior expectations for fiscal 2026. The company now expects approximately $9 billion in AI infrastructure orders from hyperscalers in fiscal 2026, a 4.5 times increase over fiscal 2025. This momentum is further supported by strong growth in Cisco’s Silicon One systems and Acacia Optics, both of which are foundational to high-performance AI networking.
Cisco is seeing triple-digit year-over-year order growth in AI infrastructure from enterprise, sovereign and Neocloud customers, with a growing pipeline of $3 billion. Enterprise data center switching orders, often tied to AI deployments, grew more than 40% year over year, and campus networking orders hit record highs. The company’s next-generation networking products, including WiFi 7 and industrial IoT solutions, are also experiencing rapid adoption as organizations modernize their networks to handle the increased traffic and complexity brought by AI workloads.
Price Performance and Valuation of TER and CSCO
In the year-to-date period, Teradyne’s and Cisco’s shares have gained 65.8% and 54.3%, respectively. The outperformance in Teradyne can be attributed to strong AI-related demand, which is driving significant investments in cloud AI build-out as customers accelerate production of a wide range of AI accelerators, networking, memory and power devices.
Despite Cisco’s expanding portfolio and partner base, the company is suffering from declining services revenue, flat security product revenue and stiff competition, which are major concerns.
TER and CSCO Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, Teradyne and Cisco's shares are currently overvalued as suggested by a Value Score of F.
In terms of trailing 12-month Price/Sales, Teradyne shares are trading at 10.31X, higher than Cisco’s 7.23X.
TER and CSCO Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for TER & CSCO?
The Zacks Consensus Estimate for Teradyne’s 2026 earnings is currently pegged at $7.09 per share, which has increased 16.8% over the past 30 days. This implies a 79.04% year-over-year rise.
Teradyne, Inc. Price and Consensus
Teradyne, Inc. price-consensus-chart | Teradyne, Inc. Quote
The Zacks Consensus Estimate for Cisco’s 2026 earnings is currently pegged at $4.20 per share, which has increased 0.71% over the past 30 days. This indicates a 10.24% year-over-year rise.
Cisco Systems, Inc. Price and Consensus
Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote
Teradyne earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average surprise of 17.05%. Cisco Systems’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average surprise of 2%. The average surprise of Teradyne is higher than that of Cisco Systems.
Conclusion
While both Teradyne and Cisco stand to benefit from the booming AI Infrastructure boom, Teradyne may offer greater upside potential with a robust AI-driven portfolio and a significantly higher earnings momentum compared to CSCO.
While Cisco remains a strong AI networking player, the company suffers from declines in its prior generation security products and the near-term revenue drag from the transition of its Splunk business from on-premise deals to cloud subscriptions, as well as gross margin headwinds from higher memory costs and product mix.
While Teradyne sports a Zacks Rank #1 (Strong Buy), Cisco Systems carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.