Should You Buy, Sell, or Hold TER Stock Before Q4 Earnings Release?

Teradyne TER is set to report its fourth-quarter 2025 results on Feb. 2, 2026.

For the fourth quarter of 2025, Teradyne expects revenues between $920 million and $1 billion.  Non-GAAP earnings are expected to be between $1.20 and $1.46 per share.

The Zacks Consensus Estimate for earnings is currently pegged at $1.36 per share, which has been steady over the past 30 days and indicates a 43.16% increase from the figure reported in the year-ago quarter. The consensus mark for revenues is pegged at $968.79 million, suggesting an increase of 28.68% from the year-ago quarter’s reported numbers.

Teradyne’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.76%. 

Teradyne, Inc. Price and EPS Surprise

Teradyne, Inc. price-eps-surprise | Teradyne, Inc. Quote

Let’s see how things have shaped up for the upcoming announcement.

Factors to Note Ahead of TER’s Q4 Results

Teradyne’s fourth-quarter performance is expected to benefit from strong AI-related demand for compute, networking, and memory segments. Strong demand for custom ASICs from hyperscalers is expected to have driven growth in the to-be-reported quarter. 

In the memory segment, Teradyne’s third-quarter 2025 memory test sales more than doubled from the second quarter of 2025, reaching $128 million, with 75% of revenue driven by DRAM and 25% by flash memory for cloud SSD applications.  The company expects this momentum to continue into the fourth quarter of 2025, with HBM (High Bandwidth Memory) being a significant contributor. The Magnum 7H product, which supports HBM3E and HBM4, is particularly well-positioned to meet the growing demand for AI-related memory applications.

The UltraFLEXplus system, designed for high-performance processors and networking devices, is expected to see increased demand in the to-be-reported quarter due to its architectural advantages in handling complex AI devices.

Robotics revenue is anticipated to show seasonal growth in the to-be-reported quarter, with a focus on expanding large customer and OEM channels and leveraging AI-driven features in robotics products.

TER Shares Outperform Sector

TER shares have surged 132.2% in the past six months, outperforming the broader Zacks Computer and Technology sector’s return of 16.9%. The Zacks Electronics - Miscellaneous Products industry increased 35.7% in the same time frame.

TER Stock's Performance

Teradyne’s stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.

In terms of the forward 12-month Price/Sales, Teradyne is trading at 10.41X, higher than the Zacks Electronics - Miscellaneous Products industry's 6.98X.

TER's Valuation

TER Faces Stiff Competition

Despite Teradyne’s expanding AI portfolio, 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.

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

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. 

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.

What Should Investors Do With TER Stock?

Teradyne’s robust and diversified portfolio to meet the rising demand for AI-driven technologies is expected to drive the company’s top-line in the to-be-reported quarter.

However, 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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