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ASX vs. TER: Which AI Semiconductor Stock Should You Buy Right Now?
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Key Takeaways
TER's Q2 revenues hit a record $1.33B, up over 100%, with AI-driven sales exceeding 60% of total revenues.
ASX expects LEAP revenues to beat its 2026 target and aims to double LEAP revenues in 2027.
TER trades at 30.99X forward earnings versus ASX at 21.04X, reflecting higher long-term growth expectations.
ASE Technology Holding (ASX - Free Report) and Teradyne (TER - Free Report) are both important players in the semiconductor industry, but they serve different roles in the chip manufacturing and testing ecosystem. ASE Technology provides outsourced semiconductor assembly, packaging and testing services, while Teradyne supplies automated test equipment used to evaluate semiconductor chips and electronic systems.
Both ASX and TER are well-positioned to benefit from the rising demand for AI chips, as hyperscalers continue to increase investments in AI infrastructure. However, from an investment point of view, one stock offers a more favorable outlook than the other right now. Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which stock offers a more compelling investment case.
The Case for ASE Technology Stock
ASE Technology is seeing strong demand for its leading-edge advanced packaging (LEAP) services as the growth of AI increases demand for more complex semiconductor packaging and testing. LEAP revenues are tracking ahead of the company’s earlier 2026 target of $3.5 billion. Management now expects to add another few hundred million dollars to this year's LEAP revenues and is targeting a doubling of LEAP revenues in 2027.
The company has clear visibility into customer demand and the capacity needed to support this growth. ASE plans to add facilities and equipment to expand LEAP capacity, with another $2 billion of CapEx added to its 2026 plans. Management said the company expects to continue making heavy investments in both advanced packaging and testing to support customer demand.
The growth is already showing up in ASE's results. In the second quarter of 2026, ATM revenues rose 36% year over year to TWD 126.1 billion. Higher LEAP volumes also helped lift ATM gross margin to 27.3% from 21.9% a year earlier. Management expects LEAP and test businesses to remain margin accretive and sees ATM gross margin moving above 30% in the fourth quarter of 2026.
Still, execution remains a key factor. ASE said its near-term growth is limited by how quickly it can install equipment and complete new facilities. ASE is working on 13 greenfield and eight brownfield projects. These projects are expected to provide capacity through 2028 and into part of 2029. However, managing so many projects at the same time might create execution risks, particularly around construction, equipment installation and meeting required timelines.
ASE Technology is seeing continued demand for its Electronics Manufacturing Services (EMS) business, but rising component costs and product mix are putting pressure on EMS profitability. In the second quarter of 2026, EMS revenues increased 6% sequentially to TWD 65.8 billion. However, EMS gross margin fell 0.6 percentage points sequentially to 8.9%, while EMS operating margin declined to 2.4% from 3% in the prior quarter. Management attributed the margin pressure to unfavorable product mix and a higher component cost environment. While management expects to pass on these costs to customers, the lower-margin EMS business could remain a drag on overall profitability compared with ASE’s faster-growing and more profitable ATM operations.
The Case for Teradyne Stock
Teradyne is benefiting from strong AI-related demand across its semiconductor testing, product testing and robotics businesses. In the second quarter of 2026, the company reported record revenues of $1.33 billion, up more than 100% year over year. All three business groups posted year-over-year and sequential growth. AI-driven revenues accounted for more than 60% of total revenues, showing the growing impact of AI across Teradyne's business.
The Semi Test business remained the main growth driver. Revenues increased 128% year over year to more than $1 billion. Compute revenues within the SOC business increased nearly 600% year over year as demand for AI-related chips remained strong. Teradyne also completed correlation with a second AI hyperscaler and shipped its first merchant GPU order, which could support future share gains in compute testing.
Memory testing is also supporting growth. Memory revenues reached a record $212 million in the second quarter, marking the third straight quarter above $200 million. Strong demand for HBM and DRAM testing, along with a recovery in NAND, helped drive results. Teradyne said memory manufacturers are planning additional capacity, with the quarterly book-to-bill ratio exceeding 2, which points to continued demand ahead.
AI demand is also creating opportunities beyond semiconductor testing. Product Test revenues rose 26% year over year, helped by optical test, board test and networking applications. The company's Omnyx platform is gaining customer traction, while its Multilane Test Products joint venture is benefiting from rising demand for high-speed data center interconnect testing. Robotics revenues increased 33% year over year, with electronics manufacturing and semiconductor applications up 50% from the first quarter.
Teradyne expects the AI investment cycle to remain a key growth driver in the coming years. Management sees stronger growth in memory, auto and industrial, IST, Product Test and Robotics in the second half of 2026. The company expects growth to pick up again in 2027 as the overall automated test equipment market expands and Teradyne gains share in key areas.
ASX vs. TER: Earnings Estimate Trend
The earnings estimate revision trend for the two companies reflects that analysts are turning more bullish toward TER.
ASX Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
TER Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
ASX vs. TER: Price Performance and Valuation
Year to date, shares of ASX and TER have surged 130.6% and 72.2%, respectively.
ASX Vs. TER: YTD Price Return Performance
Image Source: Zacks Investment Research
Currently, TER is trading at a forward 12-month P/E ratio of 30.99X, higher than ASX’s forward 12-month P/E multiple of 21.04X. TER’s higher valuation reflects strong investor confidence in AI-driven semiconductor testing demand, putting it above ASX in terms of valuation, reflecting the high growth expectations of the company in the long term.
ASX vs. TER: Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Conclusion: Buy TER, Hold ASX Right Now
Both ASX and TER are benefiting from strong demand for AI chips and data center infrastructure. However, ASE Technology faces execution risks as it expands capacity across multiple projects, while its lower-margin EMS business continues to face pressure from higher component costs and an unfavorable product mix.
In contrast, Teradyne is seeing strong AI-driven demand across semiconductor testing, memory testing, product testing and robotics. Further, TER’s valuation reflects high growth expectations, as the company remains well positioned to benefit from rising AI-driven semiconductor testing demand over the long term.
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ASX vs. TER: Which AI Semiconductor Stock Should You Buy Right Now?
Key Takeaways
ASE Technology Holding (ASX - Free Report) and Teradyne (TER - Free Report) are both important players in the semiconductor industry, but they serve different roles in the chip manufacturing and testing ecosystem. ASE Technology provides outsourced semiconductor assembly, packaging and testing services, while Teradyne supplies automated test equipment used to evaluate semiconductor chips and electronic systems.
Both ASX and TER are well-positioned to benefit from the rising demand for AI chips, as hyperscalers continue to increase investments in AI infrastructure. However, from an investment point of view, one stock offers a more favorable outlook than the other right now. Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which stock offers a more compelling investment case.
The Case for ASE Technology Stock
ASE Technology is seeing strong demand for its leading-edge advanced packaging (LEAP) services as the growth of AI increases demand for more complex semiconductor packaging and testing. LEAP revenues are tracking ahead of the company’s earlier 2026 target of $3.5 billion. Management now expects to add another few hundred million dollars to this year's LEAP revenues and is targeting a doubling of LEAP revenues in 2027.
The company has clear visibility into customer demand and the capacity needed to support this growth. ASE plans to add facilities and equipment to expand LEAP capacity, with another $2 billion of CapEx added to its 2026 plans. Management said the company expects to continue making heavy investments in both advanced packaging and testing to support customer demand.
The growth is already showing up in ASE's results. In the second quarter of 2026, ATM revenues rose 36% year over year to TWD 126.1 billion. Higher LEAP volumes also helped lift ATM gross margin to 27.3% from 21.9% a year earlier. Management expects LEAP and test businesses to remain margin accretive and sees ATM gross margin moving above 30% in the fourth quarter of 2026.
Still, execution remains a key factor. ASE said its near-term growth is limited by how quickly it can install equipment and complete new facilities. ASE is working on 13 greenfield and eight brownfield projects. These projects are expected to provide capacity through 2028 and into part of 2029. However, managing so many projects at the same time might create execution risks, particularly around construction, equipment installation and meeting required timelines.
ASE Technology is seeing continued demand for its Electronics Manufacturing Services (EMS) business, but rising component costs and product mix are putting pressure on EMS profitability. In the second quarter of 2026, EMS revenues increased 6% sequentially to TWD 65.8 billion. However, EMS gross margin fell 0.6 percentage points sequentially to 8.9%, while EMS operating margin declined to 2.4% from 3% in the prior quarter. Management attributed the margin pressure to unfavorable product mix and a higher component cost environment. While management expects to pass on these costs to customers, the lower-margin EMS business could remain a drag on overall profitability compared with ASE’s faster-growing and more profitable ATM operations.
The Case for Teradyne Stock
Teradyne is benefiting from strong AI-related demand across its semiconductor testing, product testing and robotics businesses. In the second quarter of 2026, the company reported record revenues of $1.33 billion, up more than 100% year over year. All three business groups posted year-over-year and sequential growth. AI-driven revenues accounted for more than 60% of total revenues, showing the growing impact of AI across Teradyne's business.
The Semi Test business remained the main growth driver. Revenues increased 128% year over year to more than $1 billion. Compute revenues within the SOC business increased nearly 600% year over year as demand for AI-related chips remained strong. Teradyne also completed correlation with a second AI hyperscaler and shipped its first merchant GPU order, which could support future share gains in compute testing.
Memory testing is also supporting growth. Memory revenues reached a record $212 million in the second quarter, marking the third straight quarter above $200 million. Strong demand for HBM and DRAM testing, along with a recovery in NAND, helped drive results. Teradyne said memory manufacturers are planning additional capacity, with the quarterly book-to-bill ratio exceeding 2, which points to continued demand ahead.
AI demand is also creating opportunities beyond semiconductor testing. Product Test revenues rose 26% year over year, helped by optical test, board test and networking applications. The company's Omnyx platform is gaining customer traction, while its Multilane Test Products joint venture is benefiting from rising demand for high-speed data center interconnect testing. Robotics revenues increased 33% year over year, with electronics manufacturing and semiconductor applications up 50% from the first quarter.
Teradyne expects the AI investment cycle to remain a key growth driver in the coming years. Management sees stronger growth in memory, auto and industrial, IST, Product Test and Robotics in the second half of 2026. The company expects growth to pick up again in 2027 as the overall automated test equipment market expands and Teradyne gains share in key areas.
ASX vs. TER: Earnings Estimate Trend
The earnings estimate revision trend for the two companies reflects that analysts are turning more bullish toward TER.
ASX Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
TER Earnings Estimate Revision Trend
Image Source: Zacks Investment Research
ASX vs. TER: Price Performance and Valuation
Year to date, shares of ASX and TER have surged 130.6% and 72.2%, respectively.
ASX Vs. TER: YTD Price Return Performance
Image Source: Zacks Investment Research
Currently, TER is trading at a forward 12-month P/E ratio of 30.99X, higher than ASX’s forward 12-month P/E multiple of 21.04X. TER’s higher valuation reflects strong investor confidence in AI-driven semiconductor testing demand, putting it above ASX in terms of valuation, reflecting the high growth expectations of the company in the long term.
ASX vs. TER: Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Conclusion: Buy TER, Hold ASX Right Now
Both ASX and TER are benefiting from strong demand for AI chips and data center infrastructure. However, ASE Technology faces execution risks as it expands capacity across multiple projects, while its lower-margin EMS business continues to face pressure from higher component costs and an unfavorable product mix.
In contrast, Teradyne is seeing strong AI-driven demand across semiconductor testing, memory testing, product testing and robotics. Further, TER’s valuation reflects high growth expectations, as the company remains well positioned to benefit from rising AI-driven semiconductor testing demand over the long term.
Currently, TER sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick over ASX, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.