ZACKS·2025-12-22 17:41Core Insights - Teradyne (TER) and Advanced Micro Devices (AMD) are significant players in the AI components sector of the semiconductor market, with TER focusing on automated test equipment and AMD on high-performance CPUs and GPUs for AI workloads [2][3] Semiconductor Market Overview - The global semiconductor market was valued at $681.05 billion in 2024 and is projected to reach $2,062.59 billion by 2032, with a CAGR of 15.4% from $755.28 billion in 2025 [3] Teradyne's Positioning - Teradyne's Semiconductor Test revenues increased by 7% year over year and 23% sequentially in Q3 2025, making up 78.8% of total sales [4] - The growth is driven by strong demand for AI-related technologies, leading to significant investments in cloud AI infrastructure [5] - Teradyne launched the ETS-800 D20, enhancing its portfolio in AI-driven semiconductor testing solutions [6] - In Q3 2025, 8% of Teradyne's robotics sales were AI-related, up from 6% in the previous quarter, indicating a growing focus on AI integration [7] AMD's Positioning - AMD is expanding its data center AI business, particularly with the ramp-up of its Instinct MI350 Series GPUs and the upcoming MI400 Series accelerators [9] - The partnership with HPE aims to introduce the "Helios" AI architecture, expected to generate over $100 billion in revenues [10][11] - AMD's data center AI initiatives are supported by collaborations with major players like Oracle and IBM [11] Stock Performance and Valuation - In the last six months, TER shares increased by 123.4%, while AMD shares rose by 64.7% [12] - Both TER and AMD shares are currently considered overvalued, with TER trading at a forward Price/Sales ratio of 8.26X and AMD at 8.12X [15] - The Zacks Consensus Estimate for TER's 2025 earnings is $3.51 per share, reflecting a 9.01% year-over-year increase, while AMD's estimate is $3.96 per share, indicating a 19.64% year-over-year rise [17] Earnings Performance - Teradyne has consistently surpassed earnings estimates with an average surprise of 10.76%, while AMD has an average surprise of 2.45% [18][20] Conclusion - Both Teradyne and AMD are well-positioned to capitalize on the growing AI semiconductor market, but Teradyne shows higher growth potential due to its diversified AI-focused portfolio and stronger earnings surprises [21] - AMD's growth is tempered by competition from NVIDIA in the AI chip market, which may impact its near-term prospects [22] - Teradyne holds a Zacks Rank 2 (Buy), while AMD has a Zacks Rank 3 (Hold), indicating a stronger investment case for Teradyne [23]