Is Teradyne Stock Outperforming the Nasdaq?

Teradyne, Inc. (TER), headquartered in North Reading, Massachusetts, is a leading global semiconductor company that designs, manufactures, and markets automated test systems and robotics products. Valued at $31.8 billion by market cap, the company's test equipment products and services include semiconductor test systems, military, aerospace test instrumentation, circuit-board test, inspection systems, automotive diagnostic, and test systems.

Companies worth $10 billion or more are generally described as “large-cap stocks,” and TER perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the semiconductor equipment & materials industry. Teradyne's strong market position is driven by its revenue and net income growth, solid balance sheet, and strategic investments. Its focus on optimizing its portfolio and expanding market reach diversifies revenue streams and boosts growth potential. The company's ability to streamline operations and concentrate on high-growth areas further solidifies its competitive position.

Despite its notable strength, TER slipped 2.5% from its 52-week high of $205, achieved on Dec. 8. Over the past three months, TER stock has surged 73.8%, considerably outperforming the Nasdaq Composite’s ($NASX) 7.8% gains during the same time frame.

In the longer term, shares of TER rose 130.4% on a six-month basis and gained 67.3% over the past 52 weeks, significantly outperforming NASX’s six-month gains of 20.3% and solid 19.5% returns over the last year.

To confirm the bullish trend, TER has been trading above its 200-day moving average since mid-May, with a minor fluctuation. The stock has been trading above its 50-day moving average since late July.

Teradyne's recent success is driven by AI-related demand, particularly in computer, networking, and memory test segments. Its growth stems from rising investor interest in its positioning in AI chip testing, automation, and robotics. The company's Q3 performance was strong, with over half of the revenue AI-related, and expects this trend to continue. Teradyne's product innovation, such as the UltraFLEXplus system, is gaining traction, and its focus on AI-enabled robotics solutions is intensifying. With a strong capital return program and continued R&D investments, Teradyne is well-positioned for growth.

On Oct. 28, TER reported its Q3 results, and its shares closed up more than 20% in the following trading session. Its adjusted EPS of $0.85 surpassed Wall Street expectations of $0.78. The company’s revenue was $769.2 million, beating Wall Street's $744.5 million forecast. For Q4, TER expects adjusted EPS to range from $1.20 to $1.46 and revenue to range from $920 million to $1 billion.

In the competitive arena of semiconductor equipment & materials, Advantest Corporation (ATEYY) has taken the lead over TER, showing resilience with 134.8% gains over the past 52 weeks, but lagged behind the stock with a 123.8% uptick on a six-month basis.

Wall Street analysts are reasonably bullish on TER’s prospects. The stock has a consensus “Moderate Buy” rating from the 17 analysts covering it. While TER currently trades above its mean price target of $191.87, the Street-high price target of $225 suggests a 12.5% upside potential.