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TER vs. AMD: Which AI Component Supplier Stock Is the Better Buy?
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Key Takeaways
Teradyne offers greater AI growth potential, supported by strong earnings surprises.
TER's Semiconductor Test revenues surged 128% in Q2 2026 on robust AI demand.
AMD's Data Center revenues jumped 107%, but supply constraints remain a concern.
Teradyne (TER - Free Report) and Advanced Micro Devices (AMD - Free Report) are key suppliers of AI components in the semiconductor market. While TER supplies critical automated test equipment used to validate and ensure the performance of advanced AI chips, AMD designs high-performance CPUs and GPUs that power AI workloads in data centers and enterprise applications.
So, TER or AMD — Which of these AI Component Supplier Stocks has the greater upside potential? Let’s find out.
The Case for TER Stock
Teradyne is benefiting from robust demand for semiconductor testing solutions as artificial intelligence (AI) infrastructure investments accelerate. Rising demand from AI component suppliers, including GPU, CPU, high-bandwidth memory (HBM) and networking chip manufacturers, is driving growth across its Semiconductor Test business. Increasing chip complexity and advanced packaging requirements are creating additional testing opportunities.
In the second quarter of 2026, Teradyne’s Semiconductor Test revenues increased 128% year over year, supported by strong AI-related demand. Compute revenues surged nearly 600% year over year, while memory revenues reached $212 million, driven by robust demand for HBM, DRAM and NAND testing solutions. AI-driven revenues accounted for more than 60% of total sales, highlighting the company's increasing exposure to AI infrastructure investments.
Teradyne’s memory business is another key growth driver. Memory test revenues reached $212 million in the second quarter of 2026, supported by strong HBM and DRAM demand and recovering NAND investments. The company expects the memory testing market to expand more than 40% in 2026, creating additional revenue opportunities.
Teradyne expects the automated test equipment market to reach or exceed $20 billion by the end of the decade. Sustained AI infrastructure investments and expanding testing requirements also support Teradyne’s long-term growth prospects.
The Case for AMD Stock
Advanced Micro Devices is benefiting from surging demand for AI infrastructure components, particularly EPYC server processors and Instinct accelerators. Growing investments in AI data centers, expanding hyperscaler deployments and increasing adoption of agentic AI are strengthening AMD’s growth prospects. The company is also gaining traction among leading cloud providers, including Microsoft, Amazon, Google and Oracle.
AMD’s Data Center revenues surged 107% year over year to $6.7 billion in the second quarter of 2026, accounting for 58% of total revenues. EPYC processor sales grew more than 70% year over year, supported by strong enterprise demand and cloud deployments. Instinct accelerator revenues more than doubled as adoption of MI350-series products expanded across AI labs, hyperscalers and cloud providers.
The company’s expanding AI partnerships are another growth catalyst. Its Helios rack-scale AI platform, which integrates MI450 GPUs, EPYC Venice CPUs and Pensando networking, is seeing stronger-than-expected customer demand. Multi-generation deployments with OpenAI and Meta, along with expanding collaborations with Anthropic and Microsoft, are expected to accelerate AI infrastructure revenues through 2027.
AMD expects server CPU revenues to grow more than 80% year over year in the second half of 2026 and more than 70% in 2027. Management anticipates Data Center revenues will more than double in 2027. However, tight server CPU supply, higher memory costs and the complexity of ramping Helios could constrain growth and profitability.
Price Performance and Valuation of TER and AMD
Over the trailing 12 months, TER and AMD shares have rallied 114% and 100.8%, respectively. Teradyne’s robust and diversified portfolio to meet the rising demand for AI-driven technologies is contributing to its growth prospects continuously, driving top-line growth.
Despite AMD’s expanding portfolio, supply availability remains one of AMD’s biggest headwinds. Management said wafers, advanced process-node capacity, HBM, advanced packaging, substrates and several other components remain tight. The increasing contribution from data center AI accelerators and MI450 gross margins, which carry slightly below the company average, could also constrain margin expansion.
TER and AMD Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, TER and AMD shares are currently overvalued, as suggested by a Value Score of D and F, respectively.
In terms of forward 12-month Price/Sales, TER shares are trading at 10.53X, lower than AMD’s 8.22X.
TER vs AMD Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for TER & AMD?
The Zacks Consensus Estimate for TER’s 2026 earnings is currently pegged at $9.11 per share, which has remained unchanged over the past 30 days. This indicates a 130.05% year-over-year rise.
The Zacks Consensus Estimate for AMD’s 2026 earnings is currently pegged at $7.55 per share, which has remained unchanged over the past 30 days. This indicates an 81.06% year-over-year rise.
Teradyne’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 20.93%. Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 6.74%. However, TER’s average surprise is higher than that of Advanced Micro Devices.
Conclusion
While both Teradyne and Advanced Micro Devices are well-positioned to benefit from the booming AI semiconductor market, Teradyne offers higher growth potential because of stronger earnings surprises and a more diversified, AI-focused portfolio.
AMD’s expanding portfolio and growing data center AI footprint are expected to improve its top-line growth. However, stiff competition and supply chain constraints remain a concern.
Currently, Teradyne sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than Advanced Micro Devices, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
View the Zacks #1 Rank List
Image: Bigstock
TER vs. AMD: Which AI Component Supplier Stock Is the Better Buy?
Key Takeaways
Teradyne (TER - Free Report) and Advanced Micro Devices (AMD - Free Report) are key suppliers of AI components in the semiconductor market. While TER supplies critical automated test equipment used to validate and ensure the performance of advanced AI chips, AMD designs high-performance CPUs and GPUs that power AI workloads in data centers and enterprise applications.
So, TER or AMD — Which of these AI Component Supplier Stocks has the greater upside potential? Let’s find out.
The Case for TER Stock
Teradyne is benefiting from robust demand for semiconductor testing solutions as artificial intelligence (AI) infrastructure investments accelerate. Rising demand from AI component suppliers, including GPU, CPU, high-bandwidth memory (HBM) and networking chip manufacturers, is driving growth across its Semiconductor Test business. Increasing chip complexity and advanced packaging requirements are creating additional testing opportunities.
In the second quarter of 2026, Teradyne’s Semiconductor Test revenues increased 128% year over year, supported by strong AI-related demand. Compute revenues surged nearly 600% year over year, while memory revenues reached $212 million, driven by robust demand for HBM, DRAM and NAND testing solutions. AI-driven revenues accounted for more than 60% of total sales, highlighting the company's increasing exposure to AI infrastructure investments.
Teradyne’s memory business is another key growth driver. Memory test revenues reached $212 million in the second quarter of 2026, supported by strong HBM and DRAM demand and recovering NAND investments. The company expects the memory testing market to expand more than 40% in 2026, creating additional revenue opportunities.
Teradyne expects the automated test equipment market to reach or exceed $20 billion by the end of the decade. Sustained AI infrastructure investments and expanding testing requirements also support Teradyne’s long-term growth prospects.
The Case for AMD Stock
Advanced Micro Devices is benefiting from surging demand for AI infrastructure components, particularly EPYC server processors and Instinct accelerators. Growing investments in AI data centers, expanding hyperscaler deployments and increasing adoption of agentic AI are strengthening AMD’s growth prospects. The company is also gaining traction among leading cloud providers, including Microsoft, Amazon, Google and Oracle.
AMD’s Data Center revenues surged 107% year over year to $6.7 billion in the second quarter of 2026, accounting for 58% of total revenues. EPYC processor sales grew more than 70% year over year, supported by strong enterprise demand and cloud deployments. Instinct accelerator revenues more than doubled as adoption of MI350-series products expanded across AI labs, hyperscalers and cloud providers.
The company’s expanding AI partnerships are another growth catalyst. Its Helios rack-scale AI platform, which integrates MI450 GPUs, EPYC Venice CPUs and Pensando networking, is seeing stronger-than-expected customer demand. Multi-generation deployments with OpenAI and Meta, along with expanding collaborations with Anthropic and Microsoft, are expected to accelerate AI infrastructure revenues through 2027.
AMD expects server CPU revenues to grow more than 80% year over year in the second half of 2026 and more than 70% in 2027. Management anticipates Data Center revenues will more than double in 2027. However, tight server CPU supply, higher memory costs and the complexity of ramping Helios could constrain growth and profitability.
Price Performance and Valuation of TER and AMD
Over the trailing 12 months, TER and AMD shares have rallied 114% and 100.8%, respectively. Teradyne’s robust and diversified portfolio to meet the rising demand for AI-driven technologies is contributing to its growth prospects continuously, driving top-line growth.
Despite AMD’s expanding portfolio, supply availability remains one of AMD’s biggest headwinds. Management said wafers, advanced process-node capacity, HBM, advanced packaging, substrates and several other components remain tight. The increasing contribution from data center AI accelerators and MI450 gross margins, which carry slightly below the company average, could also constrain margin expansion.
TER and AMD Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, TER and AMD shares are currently overvalued, as suggested by a Value Score of D and F, respectively.
In terms of forward 12-month Price/Sales, TER shares are trading at 10.53X, lower than AMD’s 8.22X.
TER vs AMD Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for TER & AMD?
The Zacks Consensus Estimate for TER’s 2026 earnings is currently pegged at $9.11 per share, which has remained unchanged over the past 30 days. This indicates a 130.05% year-over-year rise.
Teradyne, Inc. Price and Consensus
Teradyne, Inc. price-consensus-chart | Teradyne, Inc. Quote
The Zacks Consensus Estimate for AMD’s 2026 earnings is currently pegged at $7.55 per share, which has remained unchanged over the past 30 days. This indicates an 81.06% year-over-year rise.
Advanced Micro Devices, Inc. Price and Consensus
Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote
Teradyne’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 20.93%. Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 6.74%. However, TER’s average surprise is higher than that of Advanced Micro Devices.
Conclusion
While both Teradyne and Advanced Micro Devices are well-positioned to benefit from the booming AI semiconductor market, Teradyne offers higher growth potential because of stronger earnings surprises and a more diversified, AI-focused portfolio.
AMD’s expanding portfolio and growing data center AI footprint are expected to improve its top-line growth. However, stiff competition and supply chain constraints remain a concern.
Currently, Teradyne sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than Advanced Micro Devices, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.