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Goldman Sachs nudged its target for the stock down from $465 to $440 following the company's latest quarterly results. Even with the lower target, the firm still sees the stock as worth significantly more than its current price of about $273. This move is a routine adjustment to a price target rather than a change in the firm's overall rating. The average target across all Wall Street analysts now sits at $468, suggesting most experts believe the company's role in testing complex AI chips will drive the stock higher over time.
Source: Goldman Sachs
After Teradyne reported its October results, we raised our revenue and profit projections for the year ahead. We added a new section to our thesis on how the company is using debt to fund its expansion. We also added two new metrics to what we track: the profit contributed by the robotics division and the share of sales coming from combined testing and stress-test platforms.
Teradyne brought in $1.31 billion in revenue this quarter, well above the $769 million it earned a year ago. Profits reached $2.29 per share, beating the $2.09 analysts expected. This growth is almost entirely driven by the semiconductor test division, which makes the machines that verify high-end chips are working before they ship.
The result shows that the artificial intelligence boom is fundamentally changing Teradyne's business. Because AI chips and high-speed memory are more complex than standard processors, they require more time on Teradyne's machines. This "test intensity" is allowing the company to grow much faster than the total number of chips being produced, making it a key gatekeeper for the industry's infrastructure build-out.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
The company reports its latest results today. Analysts expect earnings of about $2.09 per share on roughly $1.27 billion in sales. Teradyne has a long streak of beating these targets, having topped expectations in each of the last eight quarters. Beyond the headline numbers, the focus is on whether the high demand for testing complex AI chips is holding steady. We are also watching for any growth in the robotics division, which the company is trying to build into a second major pillar of the business alongside its chip-testing equipment.
Teradyne's robotics division is partnering with Sereact to use artificial intelligence for tasks that have traditionally been hard to automate. The partnership focuses on retail and logistics, specifically handling unpredictable items like fashion returns that vary in shape and size.
While most of Teradyne's profit comes from testing computer chips, its robotics unit is a key part of its long-term growth plan. Success in automating these types of complex warehouse tasks would help prove that the robotics business can become a major second pillar for the company alongside its chip-testing hardware.
Source: Business Wire
Management consistently sets a bar they can clear, beating their own profit targets for eight straight quarters as the business outruns even their bullish forecasts.
| Expectation | |
|---|---|
| EPS | $2.12 |
| Revenue | $1.31B |