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AI Boom Fuels Teradyne Revenue Surge
3 Feb
Summary
- Teradyne forecasts Q1 revenue and profit exceeding Wall Street expectations.
- Chipmakers' AI-driven data center expansion boosts demand for testing equipment.
- Company anticipates strong growth across all businesses in 2026 due to AI.
Teradyne has forecast first-quarter revenue and profit that exceed Wall Street estimates, with shares rising over 20% in extended trading. This strong performance is attributed to substantial investments by technology firms in data center expansion to facilitate AI capabilities.
The growing complexity of AI compute and memory chips, along with faster production schedules, is prompting chipmakers to increase their capital expenditure on testing equipment, which directly benefits Teradyne.
The company, whose equipment verifies the quality and reliability of semiconductors, noted that improved utilization rates at major chip factories often precede new orders for testing equipment.
Teradyne's CEO, Greg Smith, expressed confidence, stating, "In 2026, we expect year-over-year growth across all of our businesses, with strong momentum in compute driven by AI." The company provides automated test equipment for a wide range of chips, including those used in smartphones and AI data centers.
For the first quarter, Teradyne projects revenue between $1.15 billion and $1.25 billion, surpassing analysts' average estimate of $934.5 million. Adjusted earnings per share are expected to range from $1.89 to $2.25, also exceeding the average estimate of $1.26.
In the fourth quarter, Teradyne reported revenue of $1.08 billion, beating an estimate of $973.2 million, primarily due to AI-related demand in compute, networking, and memory segments within its semi test business.
