Teradyne Q2 Earnings Beat Estimates, Revenues Increase Year over Year

Teradyne's Semiconductor Test Unit Leads the Mix

Semiconductor Test generated revenues of $1.122 billion, representing 84.4% of total quarterly sales. The segment remained Teradyne’s primary growth engine as demand for advanced compute and memory testing stayed strong.

Product Test contributed $107 million, or 8.1% of total revenues. Robotics generated $100 million, which accounted for the remaining 7.5%. The distribution shows that Semiconductor Test continued to dominate Teradyne’s revenue mix, although each business group participated in the year-over-year expansion.

Teradyne Benefits From Memory Test Strength

Record Memory revenues were driven by continued strength in DRAM and renewed demand for NAND final-test systems. These trends supported another strong quarter for Teradyne’s semiconductor-testing portfolio.

Management linked the performance to its strategy of capturing test and robotics opportunities from the wafer stage through the AI data center. The company also noted robust near-term AI-related demand across its served markets.

TER Operating Details

Non-GAAP gross profit was $794.6 million, with the gross margin reaching 59.8%. This compared with $373.3 million and 57.3%, respectively, in the year-ago quarter, marking a 250-basis-point expansion.

Selling and administrative expenses rose 22% year over year to $192.5 million. However, these costs represented 14.5% of revenues, down from 24.2% in the prior-year period as sales growth outpaced the increase in spending.

Engineering and development expenses climbed 32% year over year to $156.3 million. As a share of revenues, the expense fell to 11.8% from 18.2%, indicating that higher development spending was absorbed by the larger revenue base.

Non-GAAP income from operations increased 356.5% year over year to $448.3 million. The non-GAAP operating margin expanded to 33.7% from 15.1%, reflecting substantial operating leverage from the sharp revenue increase.

TER’s Balance Sheet & Cash Flow

As of June 28, 2026, Teradyne’s cash and cash equivalents (including marketable securities) were $354.8 million, down from $245.5 million as of March 29, 2026.

Net cash provided by operating activities was $469.1 million in the second quarter.

TER Issues Strong Third-Quarter Outlook

For the third quarter of 2026, Teradyne expects revenues in the range of $1.20-$1.30 billion. GAAP net income attributable to the company is projected to be in the range of $1.79-$2.09 per share.

Non-GAAP earnings are expected to be between $1.85 and $2.15 per diluted share. Management said that the outlook reflects robust AI-related demand, while rising wafer fabrication equipment investment is expected to support continued growth in 2027 and beyond.

TER’s Zacks Rank & Other Stocks to Consider

Teradyne currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Zacks Computer and Technology sector include Arista Networks ANET, ASE Technology ASX and Belden BDC. While ASE currently sports a Zacks Rank #1 (Strong Buy), ANET and BDC carry a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks shares have gained 26.1% in the year-to-date period. Arista Networks is set to report second-quarter 2026 results on Aug. 4.

Shares of ASE Technology have gained 41.3% in the year-to-date period. ASE Technology is set to report the second-quarter 2026 results on July 30.

Shares of Belden have surged 76.3% in the year-to-date period. Belden is slated to report second-quarter 2026 results on July 30.

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