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Teradyne (TER) is surging to new all-time highs following its Q4 results last night, where it comfortably beat expectations. The EPS beat was its largest in more than five years, while revenue jumped 43.9% yr/yr to $1.08 bln, well ahead of expectations and marking its strongest growth rate in five years. The semiconductor test and automation equipment maker also issued upside Q1 guidance, calling for EPS of $1.89-$2.25 on revenue of $1.15-$1.25 bln.

• Growth was fueled by AI demand, which drove more than 60% of Q4 revenue (vs 40-50% in Q3), supporting 41% sequential revenue growth and double-digit sequential growth across Semiconductor Test, Product Test, and Robotics.
• Semi Test revenue was $883 mln, driven by AI compute and memory demand, with SoC revenue up 47% sequentially to $647 mln and memory revenue up 61% sequentially to $206 mln.
• Within SoC, strength was tied to VIP compute and networking as AI data-center complexity continues to rise, while within memory, demand remained centered on HBM and DRAM final test.
• The Product Test group grew double digits sequentially and yr/yr to $110 mln, driven by demand in defense and aerospace, while robotics delivered its third consecutive quarter of growth and increased 19% sequentially to $89 mln.
• Gross margin declined about 120 bps sequentially to 57.2%, primarily due to lower Product Test group margins and Robotics mix. TER expects Q1 gross margin around 58.5-59.5%, implying about 180 bps of sequential improvement at the midpoint.
• In terms of the bullish guidance, management expects the SoC TAM to grow robustly over the mid term, driven by continued data center buildout and the growth of edge AI. It also sees a resurgent Memory market in 2026, and expects AI applications to drive upwards of 70% of Q1 revenue.

Briefing.com Analyst Insight

This was TER's strongest quarter in some time, and both the Q4 and full-year results reflect a successful pivot toward AI-driven demand and high-performance computing. The mix shift is notable, with compute now roughly 50% of SoC revenue and Auto/Industrial and Mobile about 25% each, versus 2023 when compute was only about 10%. That diversification is meaningful, helping broaden TER's earnings power beyond any single end market even as AI becomes a larger driver. In the quarter, the clear highlight was the sharp acceleration in Semi Test along with continued momentum in HBM and DRAM-related memory test. Guidance reinforced the upbeat tone, with management expecting AI applications to drive upwards of 70% of Q1 revenue and viewing SoC demand as robust on continued data center buildout and edge AI. Overall, this was a bullish end to 2025, and management's commentary suggests the key drivers behind the move should continue to build into 2026, keeping TER well positioned.