Teradyne stock: record revenue leaves little room for a stumble
TER stock analysis and fair value · bull and bear case
The call: SageNoodle rates Teradyne Fairly Valued: base-case fair value USD 380 against a price of USD 404, 6% below the quote on a 3-5 years horizon. A sharp daily decline does not come with a verified company-specific announcement in the news. The latest confirmed operating development is the July 28 Q2 report: record revenue, sharply higher year-on-year sales and management’s AI-demand-led Q3 guidance.
Teradyne stock is backed by record quarterly revenue and management’s AI-demand outlook, yet its valuation assumes substantial growth will last. The day’s attention has no verified company-specific cause in the available news.
Valuation as of 7 Oct 2026 · Quote currency: USD. Latest quote: Fri, 09 Oct 2026 17:01:45 GMT.
Written with AI from the linked sources and reviewed by a SageNoodle editor. How we work.
Latest quote
USD 404.14
At publication
USD 430.32
Fair value
USD 380.00
Upside
-6.0%
P/E at publication
59.1x
EV/EBITDA
Not available
FCF yield
0.0%
ROIC Not available · Horizon 3-5 years
Why Teradyne (TER) stock is mispriced
- 01
A sharp daily decline does not come with a verified company-specific announcement in the news. The latest confirmed operating development is the July 28 Q2 report: record revenue, sharply higher year-on-year sales and management’s AI-demand-led Q3 guidance.
- 02
The core test business is enjoying a powerful demand cycle, but quarterly operating income slipped from Q1 despite higher revenue. The deterioration in sequential operating margin matters because the current share price already embeds substantial expectations.
- 03
At $430.32, a 59.1x trailing P/E leaves little valuation cushion if AI-related demand or memory testing cools. Our preliminary base case is $380 per share, with a wide scenario range reflecting cycle and execution uncertainty.
What Teradyne does and how it makes money
Teradyne (TER) sells automated test equipment used to check semiconductors and electronics, and makes collaborative and mobile robots for manufacturing and warehouse operations. Semiconductor Test is the largest reported business: it generated $1,122 million of Q2 2026 revenue, versus $107 million from Product Test and $100 million from Robotics. Customers use the test systems to verify product quality; Teradyne earns through equipment and associated solutions, while the source release does not quantify customer concentration or recurring-service contributions. Its business spans semiconductor and electronics testing plus robotics, with the report breaking out revenue by business group rather than geography. Teradyne Q2 2026 results
For the financial history and all coverage, see TERADYNE, INC (TER) company research.
The latest confirmed news is strong; the day’s catalyst is not
The available headlines and social-media count do not establish why Teradyne shares are lower today. The headlines are leads, not evidence of a new corporate development, and the company documents do not explain the day’s move. The latest verified company event is its July 28, 2026 second-quarter results release. That distinction matters: a daily price move is observable, but a cause should not be attached to it without evidence.
The results were formidable. Teradyne reported Q2 revenue of $1,329 million, including $1,122 million from Semiconductor Test; revenue was $652 million a year earlier. The release described this as the second consecutive quarter of record revenue and said memory revenue set a record, driven by DRAM strength and a resurgence in NAND final test. These are reported company results and management’s characterization, not a guarantee that the run rate persists. Teradyne Q2 2026 results
The demand story is real; so is the margin question
Teradyne’s Q2 GAAP operating income was $437.8 million, or 32.9% of revenue. In Q1, operating income was $473.0 million on revenue of $1,282.5 million, a 36.9% margin. So the second-quarter sales record did not bring a higher sequential operating margin. A single quarter cannot diagnose the cause or establish a trend, but it does complicate the easy version of the growth story: more revenue did not translate into more operating income. Teradyne Q2 2026 results
What does the stock price already assume?
At $430.32, the trailing P/E is 59.1x, based on trailing EPS of $7.28. The trailing free-cash-flow yield is 1.2%. Those figures price Teradyne as a company whose exceptional current demand can support substantial future earnings, not as a conventional equipment maker with a short memory for cycles. The balance sheet showed $349.5 million of cash and no short-term debt at June 28, 2026; the company also had marketable securities, but this preliminary valuation does not add them separately.
Our preliminary direct-equity valuation uses scenario P/E multiples on assumed normalized EPS, not a forecast of next quarter’s reported results. The base case assumes $10.00 of normalized EPS and a 38x multiple, or $380 per share. The multiple remains generous relative to many cyclical businesses; the discount to today’s price reflects the risk that recent demand is unusually strong. This is a judgment under uncertainty, not a company target.
The next test is whether guidance becomes durable earnings
For Q3 2026, management guided to revenue of $1,200 million to $1,300 million and GAAP diluted EPS of $1.79 to $2.09. CEO Greg Smith attributed the near-term outlook to robust AI-related demand and said increased wafer-fab equipment investment sets the stage for growth in 2027 and beyond. That longer-term view is a management forecast; the quarter’s reported numbers are evidence, while the 2027 claim remains to be demonstrated. Teradyne Q2 2026 results
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Teradyne revenue, margins and cash flow
Revenue (USD, billions)
Margins (%)
Free cash flow (USD, billions)
Estimated ROIC (%)
Net debt (USD, billions)
Monetary values are in USD; revenue, FCF and net debt are in billions; EPS is per share. Missing values appear as gaps and “Not available.” Source: SEC EDGAR XBRL filings, latest restated values; quarterly cash flow derived from year-to-date figures; Q4 = fiscal year minus nine months. ROIC is NOPAT (21% tax) over debt plus equity.
| Period | Revenue | Gross % | Op % | FCF | EPS | ROIC % | Net debt |
|---|---|---|---|---|---|---|---|
| FY2016 | 1.75 | 54.7 | -3.59 | 0.37 | -0.21 | Not available | Not available |
| FY2017 | 2.14 | 57.2 | 24.6 | 0.52 | 1.28 | Not available | Not available |
| FY2018 | 2.10 | 58.1 | 22.6 | 0.36 | 2.35 | Not available | Not available |
| FY2019 | 2.29 | 58.4 | 24.1 | 0.44 | 2.60 | Not available | Not available |
| FY2020 | 3.12 | 57.2 | 29.7 | 0.68 | 4.28 | Not available | Not available |
| FY2021 | 3.70 | 59.6 | 32.4 | 0.97 | 5.53 | Not available | Not available |
| FY2022 | 3.16 | 59.2 | 26.4 | 0.41 | 4.22 | Not available | Not available |
| FY2023 | 2.68 | 57.4 | 18.7 | 0.43 | 2.73 | Not available | Not available |
| FY2024 | 2.82 | 58.5 | 21.1 | 0.47 | 3.32 | Not available | Not available |
| FY2025 | 3.19 | 58.2 | 20.4 | 0.45 | 3.47 | Not available | Not available |
What Teradyne management has said
Demand
Direct quote
“In the short term, our Q3 guidance reflects robust AI-related demand.”
Long-term strategy
Direct quote
“Looking further ahead, rapid increase in wafer fab equipment investment sets the stage for continued growth in 2027 and beyond.”
Teradyne fair value: bear, base and bull scenarios
Dot marks the latest quote of USD 404.14.
Bear
25%USD 240
Direct equity valuation: assumed normalized EPS multiplied by assumed P/E multiple.
Equity value USD 37.85B ÷ 0.158B diluted shares
- Normalized EPS
- $8.00, analyst assumption
- P/E multiple
- 30x, analyst assumption
- Net debt and other claims
- None deducted in direct equity valuation
- Diluted shares
- 0.157693 billion, supplied latest diluted share count
A downturn in semiconductor-test demand resets earnings and investors assign a more cyclical multiple. The scenario does not assume that Q2 revenue persists.
Base
50%USD 380
Direct equity valuation: assumed normalized EPS multiplied by assumed P/E multiple.
Equity value USD 59.92B ÷ 0.158B diluted shares
- Normalized EPS
- $10.00, analyst assumption
- P/E multiple
- 38x, analyst assumption
- Net debt and other claims
- None deducted in direct equity valuation
- Diluted shares
- 0.157693 billion, supplied latest diluted share count
Strong demand remains supportive, but earnings settle below a straight-line extrapolation of the latest quarter and the valuation multiple moderates.
Bull
25%USD 560
Direct equity valuation: assumed normalized EPS multiplied by assumed P/E multiple.
Equity value USD 88.31B ÷ 0.158B diluted shares
- Normalized EPS
- $14.00, analyst assumption
- P/E multiple
- 40x, analyst assumption
- Net debt and other claims
- None deducted in direct equity valuation
- Diluted shares
- 0.157693 billion, supplied latest diluted share count
AI-related test demand and wafer-fab investment support higher durable earnings, while the market continues to award Teradyne a premium multiple.
Teradyne (TER) stock: bullish vs bearish case
Bull case
- Q2 revenue reached $1,329 million, more than double Q2 2025, with the company reporting records in revenue and memory testing.
- Management’s Q3 revenue guide of $1,200 million to $1,300 million implies demand remains strong in the near term.
- Teradyne serves semiconductor test, electronics test and robotics markets, giving it more than one end market if each business can grow profitably.
Bear case
- At 59.1x trailing earnings and a 1.2% trailing FCF yield, the valuation leaves limited room for a cyclical earnings reset.
- Q2 GAAP operating margin was lower sequentially even as revenue rose, raising a question about incremental profitability.
- Management’s expectations for AI demand and growth beyond 2026 remain forward-looking statements, exposed to customer demand, product delivery, supply and export-control risks.
Teradyne stock risks
| Risk | Severity | Probability | Rationale |
|---|---|---|---|
| Semiconductor demand reverses | High | Medium | The latest surge includes AI-related demand and memory-test strength. If customers reduce or delay spending, revenue and earnings could fall quickly against a premium valuation. |
| Profit conversion weakens | High | Medium | Q2 GAAP operating margin fell from Q1 despite higher revenue. Further margin erosion would challenge the assumption that sales growth creates proportionate earnings growth. |
| Execution and policy exposure | Medium | Medium | The company identifies product delivery and acceptance, supply constraints, customer demand and export controls among the risks to actual results. |
Teradyne catalysts: what could move TER stock
- 2026-10-07Neutral
Cause of today's price move remains unverified
The company documents do not identify a new event explaining the day’s move; recent headlines alone do not establish causation.
- Q3 FY2026 results date not providedNeutral
Q3 results versus management guidance
Compare reported revenue and GAAP diluted EPS with management’s Q3 ranges of $1,200 million to $1,300 million and $1.79 to $2.09.
Teradyne fair value history
| Period | Fair value | Verdict | Note |
|---|
Teradyne news
Teradyne stock: common questions
- Is Teradyne (TER) stock undervalued or overvalued?
- SageNoodle rates Teradyne Fairly Valued: base-case fair value USD 380 against a price of USD 404, 6% below the quote on a 3-5 years horizon. A sharp daily decline does not come with a verified company-specific announcement in the news. The latest confirmed operating development is the July 28 Q2 report: record revenue, sharply higher year-on-year sales and management’s AI-demand-led Q3 guidance.
- What is Teradyne's fair value?
- Bear USD 240 (25% probability, Direct equity valuation: assumed normalized EPS multiplied by assumed P/E multiple.); Base USD 380 (50% probability, Direct equity valuation: assumed normalized EPS multiplied by assumed P/E multiple.); Bull USD 560 (25% probability, Direct equity valuation: assumed normalized EPS multiplied by assumed P/E multiple.). Strong demand remains supportive, but earnings settle below a straight-line extrapolation of the latest quarter and the valuation multiple moderates.
- What is the bull case for TER stock?
- Q2 revenue reached $1,329 million, more than double Q2 2025, with the company reporting records in revenue and memory testing. Management’s Q3 revenue guide of $1,200 million to $1,300 million implies demand remains strong in the near term. Teradyne serves semiconductor test, electronics test and robotics markets, giving it more than one end market if each business can grow profitably.
- What is the bear case for TER stock?
- At 59.1x trailing earnings and a 1.2% trailing FCF yield, the valuation leaves limited room for a cyclical earnings reset. Q2 GAAP operating margin was lower sequentially even as revenue rose, raising a question about incremental profitability. Management’s expectations for AI demand and growth beyond 2026 remain forward-looking statements, exposed to customer demand, product delivery, supply and export-control risks.
- What are the biggest risks to Teradyne stock?
- Semiconductor demand reverses (High severity): The latest surge includes AI-related demand and memory-test strength. If customers reduce or delay spending, revenue and earnings could fall quickly against a premium valuation. Profit conversion weakens (High severity): Q2 GAAP operating margin fell from Q1 despite higher revenue. Further margin erosion would challenge the assumption that sales growth creates proportionate earnings growth. Execution and policy exposure (Medium severity): The company identifies product delivery and acceptance, supply constraints, customer demand and export controls among the risks to actual results.
- What could move TER stock next?
- 2026-10-07: Cause of today's price move remains unverified. The company documents do not identify a new event explaining the day’s move; recent headlines alone do not establish causation. Q3 FY2026 results date not provided: Q3 results versus management guidance. Compare reported revenue and GAAP diluted EPS with management’s Q3 ranges of $1,200 million to $1,300 million and $1.79 to $2.09.
Company reference pages
Browse company filings and market quotes to check the latest information. These pages update over time and are separate from the documents cited in this report.