Teradyne Stock Gains 58% in a Year: Should You Hold or Fold the Stock?

Teradyne TER shares have surged 57.8% in the trailing 12-month period, outperforming the Zacks Computer & Technology sector’s rise of 26.4% and the Zacks Electronics - Miscellaneous Products increase of 28.8%.

TER shares have outperformed its closest peer, Cohu COHU, which is also expanding its footprint in the semiconductor test market. Cohu shares have lost 1.1% in the trailing 12-month period.

The uptick can be attributed to strong AI-related demand that is driving up huge investments in cloud AI build-out as customers accelerate production of a wide range of AI accelerators, networking, memory and power devices. 

This has primarily boosted the Semiconductor Test business. In the third quarter of 2025, Semiconductor Test revenues rose 7% year over year and 23% sequentially, accounting for 78.8% of sales in the reported quarter.

TER Stock's Performance

TER Benefits From Growing AI Infrastructure Demand

Teradyne is benefiting from the growing demand for AI infrastructure, which is driving robust growth across its semiconductor test and robotics divisions. The company’s UltraFLEXplus system, designed for high-performance processors and networking devices, has proven to be a key catalyst in meeting the demanding requirements of AI compute and networking devices. UltraFLEXplus enables customers to reduce test development times, driving up high-efficiency volume production. 

TER’s investments in robotics have been a major growth driver. The company is focusing on expanding its large customer and OEM channels while establishing its Universal Robots cobots as the preferred platform for AI-driven work cell applications. 

In the third quarter of 2025, more than 8% of robotics sales were for AI-related products, up from 6% in the second quarter of 2025, showcasing the increasing adoption of AI features in robotics. Teradyne is leveraging its installed base of more than 100,000 robots by offering value-added services, which accounted for 14% of robotics sales in the third quarter of 2025.

AI-driven applications are also boosting demand for power ICs, particularly in the auto-industrial market segment. Teradyne’s Eagle Test platform is well-suited for testing high-performance power conversion devices used in data centers, with volumes of these devices expected to grow by more than 50% by 2027.

TER’s Initiates Positive Q4 Guidance

Teradyne’s expanding portfolio and strong demand for AI-related applications are expected to drive the company’s top-line growth.

For the fourth quarter of 2025, Teradyne expects revenues between $920 million and $1 billion. The Zacks Consensus Estimate for fourth-quarter 2025 revenues is pegged at $968.79 million, suggesting an 28.68% increase year over year. 
 
Non-GAAP earnings are expected to be between $1.20 and $1.46 per share. The consensus mark for earnings is pegged at $1.36 per share, unchanged over the past 30 days. This indicates growth of 43.16% on a year-over-year basis.

Teradyne, Inc. Price and Consensus

Teradyne, Inc. price-consensus-chart | Teradyne, Inc. Quote

Teradyne Suffers From Stiff Competition

Despite Teradyne’s expanding AI portfolio, the company is suffering from weak demand in the mobile and auto industrial segments, which is impacting overall business performance. Continued investments in factory expansion across multiple geographies to meet AI-related demand may lead to further pressure on gross margins in the near term. Stiff competition also remains a concern.

TER is facing stiff competition from companies such as Advantest Corporation ATEYY, Cohu, and ABB ABBNY. Advantest, Cohu, and ABB are expanding their footprints in the AI infrastructure space.

Advantest’s expanding footprint in the AI infrastructure space has been a key catalyst. In December 2025, Advantest announced the M5241 Memory Handler. This new, high-speed, temperature-controlled solution is made for AI and high-performance memory testing. The first shipments are planned for the second quarter of 2026.

ABB’s expanding portfolio has been noteworthy. In November 2025, ABB strengthened its partnership with Applied Digital to provide low and medium-voltage electrical infrastructure. This includes HiPerGuard medium voltage Uninterruptible Power Supply technology and medium voltage switchgear for the new 300 MW Polaris Forge 2 AI factory campus in North Dakota. This will improve power density, efficiency, and scalability for AI workloads.

TER Trading at a Premium

Teradyne shares are currently overvalued, as suggested by its Value Score of D.

Teradyne stock is trading at a premium with a forward 12-month Price/Sales of 9.07X compared with the Electronics - Miscellaneous Products industry’s 7.24X.

TER's Valuation

What Should Investors Do With TER Stock?

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.

However, sluggishness in mobile, auto, and industrial end-markets, margin pressure, and intensifying competition remain a headwind. Stretched valuation also remains a concern.

Teradyne currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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