TER's Memory Test Sales Hit $128M: Is the Growth Thesis Strengthening?

Teradyne TER is benefiting from the growing demand for memory test solutions, particularly driven by advancements in AI applications and data center investments. In the third quarter of 2025, the company reported memory test sales of $128 million, representing a 110% sequential increase from the second quarter of 2025.

A key driver of this growth is the increasing demand for High Bandwidth Memory (HBM) and DRAM, which accounted for 75% of Teradyne’s memory revenue in the third quarter of 2025. The majority of these shipments supported AI applications, with DRAM being primarily used for final testing of DRAM and HBM performance.  Flash memory, which accounted for 25% of memory revenue, was primarily driven by cloud SSD applications in AI data centers.

Teradyne’s Magnum 7H product has proven to be a key catalyst in the HBM performance test market, as it supports multiple generations of HBM technology, including HBM3E, HBM4, and future upgrades for HBM4E and HBM5.  This multi-generational capability positions Teradyne as a key player in the memory test market.

Despite a challenging memory market in 2025, with the TAM expected to decline by low double digits, Teradyne’s memory revenue has remained resilient, supported by AI-driven demand. Looking ahead to the fourth quarter and 2026, the company anticipates continued growth in memory test sales, driven by HBM, DRAM, and flash for SSD applications. As the memory market evolves, Teradyne is well-positioned to maintain its growth and solidify its lead in the semiconductor test industry.

Teradyne Suffers From Stiff Competition

Teradyne is facing stiff competition from the likes of Advantest Corporation ATEYY and KLA Corporation KLAC. Both Advantest and KLA 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.

KLA is benefiting from the growing demand for AI infrastructure through its leadership in process control and its ability to address growth markets in wafer fab equipment, including HBM and advanced packaging. The company has seen significant growth in its advanced packaging portfolio, which is essential for heterogeneous device integration in AI applications. KLAC’s advanced packaging systems revenue is expected to exceed $925 million in calendar year 2025, marking a 70% year-over-year increase.

TER’s Share Price Performance, Valuation, and Estimates

Teradyne shares have surged 147.5% in the trailing six-month period, outperforming the Zacks Computer & Technology sector’s rise of 13.6% and the Zacks Electronics - Miscellaneous Products increase of 27.9%.

TER Stock's Performance

TER stock is trading at a premium with a forward 12-month Price/Sales of 9.67X compared with the Electronics - Miscellaneous Products industry’s 6.95X. TER has a Value Score of D.

TER's Valuation

The Zacks Consensus Estimate for fiscal 2025 earnings is pegged at $3.54 per share, unchanged over the past 30 days. This suggests 9.94% year-over-year growth.

Teradyne, Inc. Price and Consensus

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

Teradyne currently carries a Zacks Rank #3 (Hold). 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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