Teradyne Stock Gains 58% in a Year: Should You Hold or Fold the Stock?

Core Insights - Teradyne (TER) shares have increased by 57.8% over the past 12 months, outperforming the Zacks Computer & Technology sector's growth of 26.4% and the Zacks Electronics - Miscellaneous Products increase of 28.8% [1] - The growth is primarily driven by strong demand for AI-related applications, leading to significant investments in cloud AI infrastructure and boosting the Semiconductor Test business [2][5] Company Performance - In Q3 2025, Semiconductor Test revenues rose by 7% year over year and 23% sequentially, accounting for 78.8% of total sales [2] - Teradyne's UltraFLEXplus system has been a key driver in meeting the demands of AI compute and networking devices, enabling reduced test development times and increased production efficiency [5] - Robotics sales for AI-related products increased to over 8% in Q3 2025, up from 6% in Q2 2025, indicating a growing adoption of AI features in robotics [6][7] Future Guidance - For Q4 2025, Teradyne expects revenues between $920 million and $1 billion, with a consensus estimate of $968.79 million, reflecting a year-over-year increase of 28.68% [9] - Non-GAAP earnings are projected to be between $1.20 and $1.46 per share, with a consensus mark of $1.36 per share, indicating a growth of 43.16% year over year [10] Competitive Landscape - Teradyne faces stiff competition from companies like Advantest, Cohu, and ABB, which are also expanding in the AI infrastructure space [11][12] - Advantest has introduced the M5241 Memory Handler for AI and high-performance memory testing, while ABB has strengthened its partnership with Applied Digital for AI-related electrical infrastructure [13][14] Valuation Concerns - Teradyne shares are currently considered overvalued, with a forward 12-month Price/Sales ratio of 9.07X compared to the industry average of 7.24X, indicating a premium valuation [15]