Teradyne lifts net income to $342.4 million as AI demand broadens
Key Facts
Teradyne reported net income attributable to the company under GAAP of $342.4 million in the third quarter of 2026, compared with $119.6 million in the same period a year earlier. Revenue rose to $1,306 million, up 70% year over year, in results the company said exceeded the high end of its guidance. Growth came as AI-related demand extended across more than one area of its business. CEO Greg Smith said, "Demand extended across the AI value chain, from memory and hard disk drive testing to high-speed connectivity and robotics." The company had announced that results would be released on October 27 at 4:30 p.m. Eastern time or later.
Revenue did not continue its rise from the previous quarter, falling from $1,329 million in the second quarter to $1,306 million in the third quarter. GAAP diluted earnings per share also fell to $2.17 from $2.38 in the previous quarter, but remained above the $0.75 reported a year earlier. Before the announcement, analysts had expected earnings of $2.08 per share and revenue of $1.26 billion, with year-over-year growth in earnings and revenue forecast at 145% and 64%, respectively. Pre-announcement forecasts also pointed to quarterly declines of about 16% in earnings and 5% in revenue, after the company reported earnings of $2.47 per share and revenue of $1.33 billion in the second quarter. Actual revenue therefore came in above analysts' estimate, while GAAP earnings per share differed from the quarterly figure Reuters cited as the second-quarter result.
Semiconductor test accounted for the largest share of quarterly revenue, at $1,072 million, compared with $138 million from product test and $96 million from robotics. That mix is consistent with the group's weight in the company's business: Teradyne said revenue from its semiconductor test group grew 19% in 2025 and accounted for about 80% of total revenue. In the same year, computing product revenue rose 90%, and computing applications made up more than half of SoC product revenue by year-end, compared with 10% in 2023. Teradyne's total revenue in 2025 was about $3.2 billion, up 13%, while fourth-quarter revenue that year was $1.1 billion. These figures provide context for a shift in demand toward computing-related tests, while Smith said in the current-quarter results that demand extended from memory to high-speed connectivity.
The robotics segment posted its highest revenue in any third quarter and turned profitable, the company said. The result places the segment among the broader sources of demand Smith cited, which included robotics alongside memory, hard disk drive and high-speed connectivity testing. In October, Teradyne announced the launch of its Titan HP platform for advanced AI data center devices and its UltraFLEXplus S platform for edge AI applications. Looking to the medium term, Smith identified a total addressable market of $12 billion to $14 billion for semiconductor automated test equipment, with a target of about $6 billion in revenue and non-GAAP earnings per share of $9.50 to $11 when that market reaches its target size. These targets are separate from the company's quarterly GAAP guidance.
For the fourth quarter of 2026, Teradyne expects revenue of $1.25 billion to $1.35 billion and GAAP diluted earnings per share of $1.88 to $2.18. Before the results announcement, Reuters reported that the stock fell 11% on October 22 amid a broader selloff in semiconductor shares. The company's stock closed at $309 on October 26, according to data supplied by EL7. Those data did not include the session's low and high prices, so they do not provide figures to support the trading range cited in the previous draft. Management was scheduled to hold a call to discuss third-quarter results and its business outlook on October 28, 2026, at 8:30 a.m. Eastern time.