On a turbulent Tuesday in the U.S. stock market, semiconductor testing equipment and robotics star stock Teradyne(TER) surged 11%, continuing to hit new all-time highs. The company’s latest earnings report demonstrated astonishing growth, showcasing how its testing equipment business is “riding the wave” in the AI boom.
Teradyne sells automated test equipment to semiconductor and electronic device manufacturers and also produces advanced robotic systems, including collaborative robots and mobile robots designed to support manufacturing and warehouse operations.
In the earnings report released after market close the previous day, Teradyne’s Q4 net profit reached $257.2 million, with earnings per share (EPS) of $1.63, compared to $146.3 million and EPS of $0.90 in the same period last year. Adjusted EPS was $1.80, far exceeding the consensus analyst estimate of $1.38, according to FactSet.
Q4 revenue also rose 44% to $1.08 billion, surpassing the analyst consensus of $970 million.
The company attributed its growth to AI-driven demand in the semiconductor testing business, particularly in computing, networking, and storage, and expects this demand to continue in the current year with growth across all business segments.
In a conference call following the earnings release, CEO Greg Smith stated that AI-driven demand accounted for over 60% of the company’s revenue in Q4, and this percentage is expected to rise to 70% in the current quarter.
For the current quarter, Teradyne expects revenue to be between $1.15 billion and $1.25 billion, significantly higher than the analyst consensus of $939 million. Adjusted EPS is expected to be between $1.89 and $2.25, crushing the analyst estimate of $1.29.
Given these numbers, the stock’s surge on Tuesday was entirely expected.
Cantor Fitzgerald analyst C.J. Muse wrote in a recent research report, “We were already very positive on the company ahead of this earnings report, but… Wow.”
Muse stated that, driven by AI demand, Teradyne showed strong momentum across all its business lines in Q4, and he expects this momentum to continue into the current quarter. He specifically highlighted that the semiconductor testing business remains the company’s core focus, expecting it to account for about 82% of total revenue, with strong AI-driven demand covering areas such as networking, computing, and storage applications.
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