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Bull: AI test intensity explodes while robotics margins inflect upward, allowing Teradyne to retain a premium hyper-growth multiple despite its mature profile.
Robotics Stagnation: Industrial macro slowdown and rising competition severely compress UR and MiR growth, eliminating the premium multiple.
Teradyne is a dominant player in semiconductor automated test equipment (ATE) with a high-growth collaborative robotics segment. Following a cyclical downturn, it is positioned for strong near-term recovery driven by AI-linked silicon complexity and advanced packaging. The core ATE business acts as a cash cow funding the structural growth of robotics.
Teradyne is a dominant player in semiconductor automated test equipment (ATE) with a high-growth collaborative robotics segment. Following a cyclical downturn, it is positioned for strong near-term recovery driven by AI-linked silicon complexity and advanced packaging. The core ATE business acts as a cash cow funding the structural growth of robotics.
Intangible assets in highly complex SoC ATE testing.
High switching costs for fabless and IDMs locked into FLEX platforms.
AI silicon complexity and advanced packaging density dramatically increase structural test intensity and duration.
Sell. Extreme valuation disconnect (-46% vs fair value) heavily prices in perpetual hyper-growth.
Teradyne, Inc. engages in the design, development, manufacture, and sale of automated test systems and robotics products in the United States, Asia Pacific, Europe, the Middle East, and Africa. The company operates through Semiconductor Test, Robotics, and Other segments. The Semiconductor Test segment offers products and services for wafer level and device package testing, and system level testing of semiconductor devices in automotive, industrial, communications, consumer, smartphones, cloud, computer and electronic game, and other applications. This segment also provides FLEX test platform systems; J750 test system to address the volume semiconductor devices, including microcontrollers; Magnum platform that tests memory devices, such as flash memory and DRAM; and ETS platform for semiconductor manufacturers, and assembly and test subcontractors in the analog/mixed signal markets. It serves integrated device manufacturers that integrate the fabrication of silicon wafers into their business; fabless companies that outsource the manufacturing of silicon wafers; foundries; and semiconductor assembly and test providers. The Robotics segment provides collaborative robotic arms and autonomous mobile robots for manufacturing, logistics, and industrial customers. It also provides product test instruments which includes operations related to the design, manufacturing and marketing of products and services for defense/aerospace test, circuit-board test, wireless test systems, and silicon photonics testing. Teradyne, Inc. was incorporated in 1960 and is headquartered in North Reading, Massachusetts.
A cyclical double-dip in semiconductor test combined with failed robotics scale-up pushes fair value below $145.
Intangible assets in highly complex SoC ATE testing.
High switching costs for fabless and IDMs locked into FLEX platforms.
Economic profit is supported when reported returns exceed the company cost-of-capital hurdle.
Unavailable
FCFF DCF remains positive at the base case: base FCFF $564.4M after capex $143.6M, with terminal value at 53.5% of enterprise value. No FCF cliff is projected unless capex/ or materially resets.
If robotics revenue exceeds +25% YoY, the market sustains its high multiple. If ATE orders decline QoQ, severe multiple contraction ensues.
If robotics revenue exceeds +25% YoY, the market sustains its high multiple. If ATE orders decline QoQ, severe multiple contraction ensues.
If robotics revenue exceeds +25% YoY, the market sustains its high multiple. If ATE orders decline QoQ, severe multiple contraction ensues.
Elevated reinvestment phase underway to scale physical robotics footprint, temporarily depressing owner earnings.
AI silicon complexity and advanced packaging density dramatically increase structural test intensity and duration.
Consumer and mobile end-market weakness extends, leading to test capacity glut and prolonged ATE digestion.
Elevated reinvestment phase underway to scale physical robotics footprint, temporarily depressing owner earnings.
Zero weight. Avoid long exposure at current levels due to a severe negative asymmetric risk profile.
Sell or trim aggressively; the current $360 level reflects extreme market exuberance entirely divorced from fair value.
Upside case depends on the report valuation range and named growth catalysts.
The market is pricing Teradyne as a perpetual high-growth software asset, flagrantly ignoring the cyclicality of ATE and the capital intensity of scaling physical robotics.
Sell. Valuation is severely disconnected from fundamental moat fade, realistic margin expansion, and capital cycle realities.
Reassess the thesis against the named valuation, risk, and quarterly checkpoint evidence in this report.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
Prolonged consumer sluggishness and failed robotics execution strand the stock at cyclical peak multiples without fundamental backing, forcing a violent re-rating downward.
Industrial macro slowdown and rising competition severely compress UR and MiR growth, eliminating the premium multiple.
Extended consumer weakness delays complex 3nm/2nm logic transitions, cratering core ATE revenues.
Failure to achieve hyper-growth expectations pops the 35x implied terminal multiple, returning to historical 22x averages.
The five developments that would weaken our investment case.
Slowing expansion in robotics and industrial automation units curtails overall corporate top-line momentum, preventing the company from achieving expected operational scale across collaborative robotics markets.
Current:13.1% for the period ended 2025-12-31
Alert ifAnnual revenue growth decelerates below 5.0% over any fiscal year
Adverse product mix shifts toward lower-margin test configurations erode profitability, restricting gross cash generation required to sustain heavy research commitments across advanced testing architectures.
Current:58.2% for the period ended 2025-12-31
Alert ifGross margin contracts below 55.0% over any fiscal year
Delays in advanced node logic testing rollouts reduce utilization across manufacturing lines, creating negative operating leverage that impairs overall corporate earnings power.
Current:21.6% for the period ended 2025-12-31
Alert ifOperating margin falls below 20.0% over any fiscal year
A divergence between cash earnings and reported net profit signals working capital strain and rising capital intensity, reducing free cash available for strategic reinvestment.
Current:1.217 as of 2026-05-10
Alert ifOperating cash flow to net income ratio falls below 1.000 over any four-quarter period
Market multiple compression removes the growth premium assigned to emerging robotics operations, depressing equity valuation even during periods of stable core semiconductor tester demand.
Current:35x implied terminal multiple as of 2026-05-10
Alert ifImplied terminal multiple compresses to 22x or below over any twelve-month period
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Project SBC-adjusted EPS, discount each year's earnings at cost of equity, then add a Gordon-growth terminal value.
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
Apply a terminal P/E to the dated forward EPS path, then discount that future share value back to the analysis date.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and at , then adjust for signed per current share.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
Multiply the peer median PEG by this stock's forecast growth to derive an implied forward P/E, then apply it to forward EPS.
Solve for the growth rate that makes the model value equal the report-date share price.
AI test intensity explodes while robotics margins inflect upward, allowing Teradyne to retain a premium hyper-growth multiple despite its mature profile.
Teradyne navigates the cyclical recovery well, but the market's perpetual 28% growth expectation proves unattainable, causing the stock to gap down to fundamental realities.
If robotics revenue exceeds +25% YoY, the market sustains its high multiple. If ATE orders decline QoQ, severe multiple contraction ensues.
Warning level: Annual revenue growth decelerates below 5.0% over any fiscal year. Slowing expansion in robotics and industrial automation units curtails overall corporate top-line momentum, preventing the company from achieving expected operational scale across collaborative robotics markets.
Warning level: Gross margin contracts below 55.0% over any fiscal year. Adverse product mix shifts toward lower-margin test configurations erode profitability, restricting gross cash generation required to sustain heavy research commitments across advanced testing architectures.
Warning level: Operating margin falls below 20.0% over any fiscal year. Delays in advanced node logic testing rollouts reduce utilization across manufacturing lines, creating negative operating leverage that impairs overall corporate earnings power.
Warning level: Operating cash flow to net income ratio falls below 1.000 over any four-quarter period. A divergence between cash earnings and reported net profit signals working capital strain and rising capital intensity, reducing free cash available for strategic reinvestment.
Warning level: Implied terminal multiple compresses to 22x or below over any twelve-month period. Market multiple compression removes the growth premium assigned to emerging robotics operations, depressing equity valuation even during periods of stable core semiconductor tester demand.
| $2.68B |
| $2.82B |
| $3.19B |
| +0.4% |
| Gross profit | $1.87B | $1.54B | $1.65B | $1.86B | -0.2% |
| Operating income | $844.1M | $529.4M | $612.7M | $660.1M | -7.9% |
| Net income | $715.5M | $448.8M | $542.4M | $554.0M | -8.2% |
| EPS (diluted) | $4.22 | $2.73 | $3.32 | $3.47 | -6.3% |
| EBITDA | $954.8M | $640.3M | $732.4M | $788.1M | -6.2% |
| R&D | $440.6M | $418.1M | $460.9M | $504.6M | +4.6% |
| SG&A | $558.1M | $577.3M | $617.0M | $648.9M | +5.2% |
Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.
| Revenue | 3,190,024,000 |
|---|---|
| Cost of revenue | 1,332,679,000 |
| Gross profit | 1,857,345,000 |
| Operating expenses | 1,168,740,000 |
| Operating income | 688,605,000 |
| Non-operating items and tax | -134,558,000 |
| Net income | 554,047,000 |
| Total assets | 4,183,599,000 |
|---|---|
| Cash | 293,751,000 |
| Current assets | 1,949,300,000 |
| Total liabilities | 1,387,847,000 |
| Current liabilities | 1,115,207,000 |
| Shareholders’ equity | 2,795,752,000 |
Point-in-time financial data used in the 2026-05-10 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022-12-31 | 3.2B | 954.8M | 715.5M | 577.9M | 414.7M | 163.2M | 110.7M | 48.2M | 752.1M | 69.7M | -66.8M | — | — | — | — | 854.8M | 132.9M | 26.9% | — | — | — |
| 2023-12-31 | 2.7B | 640.3M | 448.8M | 585.2M | 425.6M | 159.6M | 110.9M | 57.7M | 397.2M | 67.9M | -50.3M | — | — | — | — | 757.6M | 82.6M | 19.5% | — | 11.8% | — |
| 2024-12-31 | 2.8B | 732.4M | 542.4M | 672.2M | 474.1M | 198.1M | 119.7M | 60.1M | 198.6M | 76.4M | 0 | — | — | — | — | 553.4M | 76.6M | 19.6% | — | 11.9% | — |
| 2025-12-31 | 3.2B | 788.1M | 554M | 674.4M | 450.4M | 224M | 128M | 64M | 702.1M | 76.3M | 200M | — | — | — | — | 293.8M | 283.2M | 21.6% | — | 12.0% | — |
TER trades at 37.8x forward earnings against a peer median of 30.3x; EV/EBITDA of 48.3x against a peer median of 41.9x; 6 peers.
| Re-evaluate if the price compresses below $190 or if structural robotics operating margins definitively clear 20%. |
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