Teradyne’s TER fourth-quarter 2024 Semiconductor Test revenues of $561 million beat the Zacks Consensus Estimate by 8.93%. Semiconductor Test revenues rose 22% year over year, accounting for 74.5% of sales in the reported quarter.

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In the reported quarter, Teradyne’s adjusted earnings of 95 cents per share beat the Zacks Consensus Estimate by 5.56%. The earnings figure increased to 20.3% year over year.

Net sales increased 12.2% year over year to $753 million, beating the consensus mark by 1.65%. 

Teradyne, Inc. Revenue (TTM)

Teradyne, Inc. revenue-ttm | Teradyne, Inc. Quote

Click here to check the details of Teradyne’s fourth-quarter 2024 results.

AI Demand Drives Strong Growth in TER’s Semiconductor Test

Teradyne’s Semiconductor Test revenue performed well in the reported quarter primarily due to the continued strong demand from Cloud AI, which was the key driver of growth in the Semiconductor Test business.

This surge in demand was further supported by AI-driven advancements, particularly in AI accelerator Application-Specific Integrated Circuits, networking, and high-bandwidth memory (HBM) and Dynamic Random-Access Memory (DRAM), which significantly boosted the need for test equipment.

The strong demand for these AI-related components extended into the SOC and memory test segments, which saw a significant 17% year-over-year revenue growth in the fourth quarter of 2024, excluding the divestiture of the DIS business. 

This growth was primarily driven by the accelerating need for AI-related components and computing technologies, including high-performance memory like HBM and DRAM.

SOC TAM (Total Addressable Market) is expected to grow 7% year over year in 2025, further reinforcing the positive outlook for the semiconductor industry.

TER Benefits From Key Partnership

In the fourth quarter of 2024, Teradyne formed a key partnership with Infineon IFNNY to boost power semiconductor capabilities.

Teradyne’s partnership with Infineon will accelerate innovation in power semiconductor testing, focusing on silicon carbide and gallium nitride technologies for automotive and renewable energy markets. 

By joining forces, Teradyne and Infineon aim to meet the growing demand for advanced power semiconductors, which are critical to driving sustainability and energy efficiency in these rapidly evolving industries.

TER’s Growth Impacted by Weak Demand, Higher Costs

Teradyne’s robust and diversified portfolio is continuously contributing to its growth prospects and driving top-line growth.

However, Teradyne’s performance was hurt by weaker-than-expected demand in the industrial automation and robotics markets and higher operating expenses, particularly in engineering spending for semiconductor testing.

High borrowing costs and macroeconomic uncertainty have forced businesses to reduce investments, impacting demand for Teradyne’s products. Despite the company’s solid portfolio, these factors have hindered its overall performance.

TER shares have lost 5.71% following the fourth-quarter results. TER returned 19.5% in the trailing 12-month period compared with the Zacks Computer and Technology sector’s appreciation of 27.4%.

TER’s Initiates Q1 Guidance

Teradyne has provided guidance for the first quarter of 2025. It anticipates a revenue decline of approximately 5% to 10% compared to the same period in the previous year.

For first-quarter 2025, Teradyne expects revenues between $660 million and $700 million. Non-GAAP earnings are expected to be between 58 cents and 68 cents per share.

The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $697.83 million, suggesting a 16.34% increase year over year. 

The consensus mark for earnings is pegged at 64 cents per share, unchanged over the past 60 days. This indicates growth of 25.49% on a year-over-year basis.

Zacks Rank & Upcoming Earnings to Watch Out

Currently, TER carries a Zacks Rank #3 (Hold),

BILL Holdings BILL and AMETEK AME are some better-ranked stocks that investors can consider in the broader sector. While BILL currently sports a Zacks Rank #1 (Strong Buy), AMETEK carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bill Holdings’ shares have soared 24.8% in the trailing twelve months. BILL is set to report its second-quarter fiscal 2025 results on Feb. 6.

AMETEK shares have gained 12.3% in the trailing twelve months. AME is set to report its fourth-quarter 2024 results on Feb. 4.

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