Teradyne (TER, Financials) reported fourth-quarter earnings that met the high end of its guidance, driven by performance in its Semiconductor Test segment, particularly in artificial intelligence-focused markets such as Compute and Memory.

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Key growth drivers according to CEO Greg Smith include artificial intelligence accelerator application-specific integrated circuits, networking, and high-bandwidth memory dynamic random-access memory.

Adjusting for the sale of its DIS business, the corporation reported 5% revenue increase in 2024or 8%. Demand from vertically integrated companies in Cloud AI helped to drive the 17% year-over-year rise in semiconductor test revenue. Though it lagged behind rivals in the industrial automation sector, the Robotics division failed expectations. From $440 million in 2024, a reorganization project is intended to lower the breakeven revenue of the Robotics division to $365 million in 2025.

Teradyne announced fourth-quarter sales of $753 million with non-GAAP profits per share of $0.95. The Robotics segment caused the non-GAAP gross margin to be 59.4%, rather below target. The quarter's operational profit margin came out to be 22%. With system-on-chip contributing $429 million, memory at $112 million, and integrated system test at $19 million, semiconductor test revenue came to $561 million. Revenue from robotics jumped 11% consecutively to $98 million.

Teradyne brought in $2.82 billion overall for the whole year; system-on- chip and Memory income increased 17% year over years. The business returned $275 million to owners and recorded $474 million in free cash flow. Demand in Compute and Memory markets was mentioned by management; high-bandwidth memory dynamic random-access memory demand brings $500 million in Memory Test income.

Driven by AI Compute and a modest rebound in Mobile, Automotive, and Industrial applications in the second half of the year, management anticipates the system-on-chip total addressable market to rise around 7% in 2025. In the sectors of system-on-chip and memory tests, the business expects low single-digit market share. For 2025 Teradyne projects revenue growth across all sectors and gross margins ranging from 59% to 60%. Revenue from robotics is expected to increase around 10% annually. From 2024 levels, the company's midterm projection shows sales of $4.5 billion to $5.5 billion and non-GAAP profits per share of $7.00 to $9.50 reflecting a 12% to 18% compound annual revenue growth rate and a 27% earnings per share compound annual growth rate.

Focusing on silicon carbide and gallium nitride technologies, Teradyne said a strategic alliance with Infineon will hasten power semiconductor development.

Analyzes questioned the viability of Compute's expansion as well as the success of the Robotics reorganization. Management added Cloud artificial intelligence is projected to propel more market share increases in memory and system-on-chip technologies. Analyzers also asked for explanation on the Infineon collaboration. Smith said the cooperation will let Infineon concentrate on chip design while Teradyne speeds up its roadmap in power semiconductors.

Management admitted difficulties in the industrial automation sector that had an impact on robotics sales. According to the corporation, part of its approach is reorganizing activities and launching goods with artificial intelligence enabled. Analysts expressed worries on possible headwinds in the high-bandwidth memory market in 2025 and Teradyne's dependence on a small number of important clients in the Cloud AI field.