Quick Read
Teradyne delivered 87% revenue growth with $2.56 non-GAAP EPS in Q1 FY2026, as roughly 70% of revenue now ties directly to AI demand.
Peers ONTO and COHU trade at trailing P/Es of 135 and 93, with one of them losing money, making TER’s valuation profile far more compelling.
Non-GAAP operating margin expanded 17 points to 38% year over year as AI mix drove net income up more than 300%.
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Teradyne (NASDAQ:TER) reports Q2 FY2026 earnings on July 29, giving investors a read into one of the cleanest picks-and-shovels exposures to the AI buildout. The company provides testing equipment used to manufacture AI accelerators, advanced memory, and networking chips.
The company’s Q1 FY2026 earnings report showed that the business’s Semiconductor Test franchise is capturing the test-equipment spend behind every AI accelerator, memory stack, and networking chip going into a data center. That exposure drove Q1 revenue up 87.04% year over year to $1.28 billion, while non-GAAP EPS of $2.56 easily cleared the $2.11 consensus estimate. CEO Greg Smith attributed the record to a “wafer to AI data center strategy,” with roughly 70% of revenue tied to AI-related demand.
3 Reasons Teradyne Has Nearly Doubled in 2026
1. AI demand just sent Teradyne’s profits up 303%. Non-GAAP operating margin expanded to 37.5% in Q1 FY2026, from 20.5% a year earlier. Net income grew 303.36% YoY. Test equipment has fixed R&D and variable revenue, and the AI mix is now pushing incremental margins straight to the bottom line.
2. Valuation is aligned with the growth rate. Shares trade at a forward P/E of 52 against a PEG of 1.462. Analysts’ consensus price target sits at $429.88 vs. a current share price of $349.92, with 12 Buy ratings and 1 Strong Buy against just 1 Sell.
3. Capital returns keep coming. Teradyne paid $702.1 million in FY2025 buybacks and declared a $0.13 quarterly dividend.
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TER Is Growing 9x Faster Than One of Its Closest Rivals
Onto Innovation (NYSE:ONTO) is one of Teradyne’s closest process-control comps. It trades at a forward P/E of 34x while growing revenue just 9.5% YoY. TER saw nine times the revenue growth rate at a slightly higher multiple. Cohu (NASDAQ:COHU), a direct semi-test peer, is unprofitable on a TTM basis with an EPS of -$1.19 and a forward P/E of 93.
