Teradyne stock rises 12% as profits outperform, driven by AI demand

Teradyne Shares soared Tuesday after the company beat expectations for its fourth quarter thanks to strong demand for its artificial intelligence.

The robotics company reported adjusted earnings per share of $1.80, beating the $1.37 expected by analysts surveyed by LSEG. Sales were $1.08 billion, exceeding expectations of $973 million.

Teradyne’s fourth quarter revenue increased 44% year over year.

In an earnings call with analysts, CEO Greg Smith said more than 60% of Teradyne’s revenue in the fourth quarter was driven by AI. He said the company expects that percentage to be more than 70% in the next quarter.

The company issued strong guidance, attributing fourth-quarter growth to “strong AI-related demand in compute and memory.”

“In 2026, we expect strong momentum in the AI-powered computing space and year-over-year growth across all of our businesses,” the company said in a press release on Monday.

Teradyne said it expects first-quarter adjusted earnings per share of $1.89 to $2.25, well above LSEG’s forecast of $1.26.

First-quarter sales are expected to fall between $1.15 billion and $1.25 billion, also above LSEG’s forecast of $935 million.

Net income for the quarter was $257.2 million, or $1.63 per diluted share. A year ago, net income was $146.3 million, or 90 cents per share.

The company said the earnings adjustments were made for “amortization of acquired intangible assets, restructuring and other expenses, and mark-to-market adjustments to pensions.”

The onslaught of AI is hitting every technology sector, and the latest earnings reports show a knock-on effect on chip demand.

Data centers are the “driver of the market,” Smith said on the earnings call.

According to S&P Global, data center transactions will reach a record $61 billion in 2025.

Memory manufacturer stock prices sandisk skyrocketed after its second-quarter results last week, reporting 64% growth, particularly in its data center business.

apple CEO Tim Cook said last week that the company will be hurt by rising memory prices, but the iPhone maker is currently in a situation where supplies of advanced node chips are limited.

“At this time, due in part to increased demand, our supply chain is less flexible than usual,” Cook said.

Correction: This article has been corrected to reflect that Teradyne expects first-quarter adjusted earnings per share of $1.89 to $2.25. A previous version incorrectly stated the upper end of the expected EPS range.