Can Strong Semiconductor Test Segment Push Teradyne Stock Higher?

Teradyne’s TER third-quarter 2025 Semiconductor Test revenues of $606 million missed the Zacks Consensus Estimate by 2.71%. Semiconductor Test revenues rose 7% year over year and 23% sequentially, accounting for 78.8% of sales in the reported quarter.In the reported quarter, Teradyne’s adjusted earnings of 85 cents per share beat the Zacks Consensus Estimate by 8.97%. The earnings figure decreased 5.6% year over year.Net sales increased 4.3% year over year to $769 million, beating the consensus mark by 3.32%. Click here to check the details of Teradyne’s third-quarter 2025 results.Teradyne, Inc. Revenue (TTM) Teradyne, Inc. revenue-ttm | Teradyne, Inc. QuoteTER shares have rallied 20.5% following the third-quarter results. TER returned 38.2% in the year-to-date period compared with the Zacks Computer and Technology sector’s appreciation of 29.6%.AI Demand Drives Strong Growth in TER’s Semiconductor TestTeradyne’s Semiconductor Test revenue performed well in the reported quarter, primarily due to the continued strong demand from Cloud AI, which was the key driver of growth in the Semiconductor Test business. The company’s UltraFLEXplus system, specifically designed for high-performance processors and networking devices, played an important role in addressing the demanding requirements of AI devices, such as power, pin count and test data.This surge in demand was further supported by AI-driven advancements, particularly in AI accelerator Application-Specific Integrated Circuits, networking, and high-bandwidth memory (HBM) and Dynamic Random-Access Memory (DRAM), which significantly boosted the need for test equipment. Memory test sales contributed significantly to growth of the Semiconductor Test segment. In the third quarter of 2025, memory test revenue more than doubled sequentially, reaching $128 million, with 75% of the revenues driven by DRAM and 25% by flash memory for cloud SSD applications.  The demand for DRAM was primarily fueled by final tests of DRAM and HBM performance tests, which are critical for AI applications.The System on Chip (SoC) segment also played a crucial role in boosting the Semiconductor Test segment’s performance. SoC sales increased 11% quarter over quarter and 12% year over year, primarily due to the growing demand for AI-related applications.The Integrated System Test segment contributed to the overall growth, with sales increasing 9% quarter over quarter and an impressive 46% year over year. This growth was fueled by strong demand for HDD and Mobile/Compute System Level Test solutions.TER’s Growth Impacted by Weak Demand, Higher CostsTeradyne’s robust and diversified portfolio is continuously contributing to its growth prospects and driving top-line growth.However, Teradyne’s performance was hurt by weaker-than-expected demand in the industrial automation and robotics markets and higher operating expenses, particularly in engineering spending for semiconductor testing.TER’s Initiates Positive Q4 GuidanceFor the fourth quarter of 2025, Teradyne expects revenues between $920 million and $1 billion, driven by strong AI-related demand in compute, networking, and memory segments. Non-GAAP earnings are expected to be between $1.20 and $1.46 per share.The Zacks Consensus Estimate for fourth-quarter 2025 revenues is pegged at $815.84 million, suggesting an 8.36% increase year over year. The consensus mark for earnings is pegged at $1.02 per share, which has increased 2.97% over the past 30 days. This indicates growth of 7.37% on a year-over-year basis.The Zacks Consensus Estimate for 2025 revenues is pegged at $2.90 billion, suggesting a 2.76% increase year over year. The consensus mark for earnings is pegged at $3.14 per share, which has increased by a penny over the past 30 days. This indicates a decline of 2.48% on a year-over-year basis.Zacks Rank & Other Key PicksCurrently, TER carries a Zacks Rank #2 (Buy).BILL Holdings BILL, Advanced Energy AEIS and Akamai Technologies AKAM are some other top-ranked stocks that investors can consider in the broader sector. Each stock carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Bill Holdings’ shares have plunged 42% in the year-to-date period. BILL is set to report its first-quarter fiscal 2026 results on Nov. 6.Advanced Energy is set to report third-quarter 2025 results on Nov. 4. Advanced Energy shares have surged 79.9% year to date.Akamai Technologies is set to report third-quarter 2025 results on Nov. 6. Akamai Technologies shares have plunged 23.7% year to date.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Akamai Technologies, Inc. (AKAM): Free Stock Analysis Report Teradyne, Inc. (TER): Free Stock Analysis Report Advanced Energy Industries, Inc. (AEIS): Free Stock Analysis Report BILL Holdings, Inc. (BILL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks