Teradyne’s duopoly with Advantest in automated semiconductor testing remains a compelling long-term structural advantage.

‍Hyperscaler buildout and ongoing semiconductor growth are powerful catalysts for TER, given that every chip requires testing.

‍TER’s position remains strong, but its underperformance versus Advantest and high valuation make it a hold.

‍I could reassess buying Teradyne around $275.

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I last recommended Teradyne (TER) in June 2024, expecting the rally to continue, and it did, in spades! Since then, Teradyne returned 165%, comprehensively beating the S&P500's 44%.

I like the company; it does have an excellent future as the smaller but vital player in the ATE industry duopoly, which has its inherent advantage of a barrier to entry as most duopolies have. Nor is AI data center spending showing any signs of slowing down, but its valuation and past performance make it a hold for now. It certainly has disappointed in the past, going from leader to laggard, as I showed in comparison to its bigger rival, Advantest.

At a price of $367, Teradyne quotes 41x 2026 earnings, growing at a CAGR of 22% in the next 4 years. That’s a PEG ratio of almost 2, which is high given its track record. Its market cap of $59Bn values the company at 11.4x 2026 sales, growing at 17% annually for the next 4 years. That’s a P/S growth ratio of 0.67, also higher than my usual cutoff of 0.4 to 0.5.

Here is the full article on Seeking Alpha

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