Verdict: Justified

Key finding: Teradyne beat Q3 and guided Q4 EPS above consensus, but Q4 revenue guidance ($1.25-1.35B) is flat with Q3. Revenue has sat at $1.28-1.33B for four straight quarters, and year-over-year growth drops from +104% (Q2) to +70% (Q3) to about +20% at the Q4 midpoint. Gross margin slipped for the third quarter in a row. Chip peers are up today, so the drop is Teradyne-specific.

Since last dive

Scorecard

Ticker Rev last Q ($M) Rev YoY last Q Rev YoY prior Q Gross margin (last Q, trend) Op margin EPS last Q vs yr ago P/S Mkt cap 1-mo price %
TER (Sep Q) 1,306 +69.8% +103.9% 59.1% (down from 59.8%, 60.9%) 30.8% 2.17 vs 0.75 9.3 $46.4B -18.8%
FORM (Jun Q) 258 +31.9% +32.0% 50.7% (up from 47.9%) 22.4% 0.70 vs 0.12 9.5 $8.6B -17.6%
COHU (Jun Q) 149 +38.4% +29.3% 45.4% (up from 40.5%) 0.2% -0.00 vs -0.36 4.7 $2.5B -23.9%
AEHR (May Q) 20 +40.2% -43.7% 40.6% (up from 32.7%) -5.0% 0.05 vs -0.10 41.7 $2.1B -38.7%

TER = Q3 from the 10/27 release (GAAP); peers = latest reported quarter (Q3 not yet reported). 1-mo % = 9/25 to 10/27 close. TER P/S and market cap at today's $296.66.

TER is still the quality leader of the test group, with growth (+70%) about 2x the peers and the highest op margin (30.8%). The lead is shrinking: TER's growth and margins are decelerating, while FORM, COHU and AEHR show rising gross margins. On P/S, TER (9.3) now trades in line with FORM (9.5) instead of at a premium.

Move

Catalyst

Q3 2026 results, released 10/27 after the close (8-K exhibit 99.1):
- Revenue $1,306M, up 70% YoY (Q3'25 $769M) and down from $1,329M in Q2. Consensus was ~$1.26B, and the result was above the high end of the $1.20-1.30B guide.
- Semiconductor Test $1,072M, Product Test $138M, Robotics $96M. Robotics had its highest Q3 revenue ever and turned profitable. Memory and Integrated Systems Test set revenue records "driven by AI demand".
- GAAP gross margin 59.1%, GAAP op income $402.0M (30.8%), non-GAAP op margin 31.6%. GAAP EPS $2.17, non-GAAP $2.29 vs ~$2.08 consensus.
- Q4 guide: revenue $1,250-1,350M (midpoint $1,300M, flat with Q3; about +20% YoY vs Q4'25 $1,083M), GAAP EPS $1.88-2.18, non-GAAP EPS $1.95-2.25 vs ~$2.03 consensus.
- Bought back $99.3M of stock in Q3 ($173.5M year to date). Dividend $0.13.
- CEO Greg Smith: demand "extended across the AI value chain, from memory and hard disk drive test to high-speed interconnect and robotics."
- Reasons given in coverage for the drop: the sequential step-down in the outlook, and the open question of whether the second-half lull in compute test shipments is customer timing or early softening in AI test demand (Tickeron). The stock was also up ~59.5% YTD going into the print.
- The 10/28 8:30 ET call commentary was not yet available in any source searched. Orders and bookings are not disclosed in the release.

Sector

Risks

Judgement

Justified. The business is not broken. Q3 beat and Q4 EPS guidance is above consensus; robotics turned profitable and memory test set a record. Nothing in the release confirms the Lam-style supply problem behind the 10/22 drop. But revenue has stopped growing quarter to quarter, YoY growth is heading from +104% to about +20%, and margins are slipping. A ~7-8% repricing on that, while peers rise, fits the facts. This is not an overreaction to a good report. Whether the long-standing ~$297-302 floor holds is a price question, not a business question.

Sources