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    TER
    Earnings call· Mar 2026(Q1 FY26)

    TERADYNE Q1 FY26 earnings call TER

    Apr 29, 2026 Source

    Executive summary

    Teradyne Q1 FY26 — Record Revenue and EPS Driven by AI Demand

    Teradyne delivered record first-quarter results, significantly exceeding expectations, driven by robust AI demand across its wafer-to-data center strategy. The company is navigating a lumpy growth environment due to customer concentration and supply chain dynamics, leading to a first-half weighted revenue outlook. Management remains confident in its full-year trajectory and long-term target model, emphasizing strategic investments in R&D to capitalize on emerging opportunities.

    Highlights

    5

    • Record Q1 2026 revenue of $1.282 billion, up 87% YoY and 18% QoQ, exceeding guidance.

    • Record non-GAAP EPS of $2.56, up 241% YoY and 42% QoQ, above guidance.

    • AI-related demand accounted for nearly 70% of Q1 revenue, up from 60% in Q4 2025.

    • Robotics revenue grew 32% YoY to $91 million, marking its fourth consecutive sequential growth quarter.

    • Gross margin reached 60.9%, up 370 bps sequentially, driven by strong Semi Test volume and product mix.

    Concerns

    3

    • Mobile segment revenue was roughly flat QoQ and remains a muted impact on overall results.

    • Visibility into the second half of 2026 is limited, with potential for order lumpiness and ecosystem bottlenecks.

    • Q2 2026 gross margin expected to normalize to 58%-59%, down from Q1's 60.9% due to nonrecurring benefits.

    Guidance & targets

    14
    CategoryTargetConfidence
    Q2 2026 Revenue
    $1.15 billion to $1.25 billion
    high materiality
    High
    Q2 2026 Non-GAAP EPS
    $1.86 to $2.15
    high materiality
    High
    Q2 2026 Gross Margin
    58% to 59%
    medium materiality
    High
    Q2 2026 Operating Expenses as % of Sales
    27% to 28%
    medium materiality
    High
    Q2 2026 Non-GAAP Operating Profit Rate
    30% to 32%
    medium materiality
    High
    FY26 Revenue Weighting
    55% to 60% in first half
    high materiality
    Medium
    FY26 Merchant GPU Revenue
    about $50 million
    medium materiality
    Medium
    Midterm Target Model Revenue
    $6 billion
    high materiality
    High
    Midterm Target Model Non-GAAP EPS
    $9.50 to $11
    high materiality
    High
    Midterm Silicon Photonics/Co-packaged Optics TAM Expansion
    $300 million to $700 million per year
    medium materiality
    Medium
    FY26 Memory Market TAM Growth
    solid TAM growth
    medium materiality
    High
    FY26 Memory Market Share Gain
    low single-digit share
    medium materiality
    High
    Midterm Merchant GPU Market Share
    30% to 70% range
    high materiality
    Medium
    OpEx Growth Rate
    50% of revenue growth
    medium materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Total Company
    Record financial performance driven by AI demand across all three business groups.
    		$1.282B87%18%—
    Semiconductor Test (Semi Test)
    Broke the $1 billion threshold for the first time, driven by AI strength in compute segments and memory.
    		$1.1B100%+26%—
    Semi Test - SoC
    Compute is the largest portion, reflecting a shift from mobile-centric to AI-dominant portfolio.
    Compute portion of SoC revenue: ~75%
    		$882M———
    Semi Test - Memory
    Strong quarter driven by robust HBM and DRAM test solution demand, with successful ramp of Magnum 7.
    		$203M—relatively flat—
    Semi Test - IST
    Early indicators for potential growth in H2 2026 and 2027, primarily from HDD fueled by AI exabyte growth.
    		$27Mrelatively flat——
    Product Test Group
    Growth led by sustained defense and aerospace demand and production board test.
    		$80M8%——
    Robotics
    Fourth consecutive sequential growth quarter, with strength across e-commerce, electronics manufacturing, and semiconductors, including AI data centers.
    AI revenue as % of sales: 15%
    		$91M32%sequential growth (fourth consecutive)—

    Operational metrics

    14
    AI-related demand as % of revenue
    70%up from 60% in Q4 2025
    Q1 FY26

    Reflects the increasing impact of AI on the company's business.

    Non-GAAP Gross Margin
    60.9%up 370 bps sequentially
    Q1 FY26

    Record gross margin for the company.

    Non-GAAP Operating Income
    $480M
    Q1 FY26

    All-time financial record.

    Non-GAAP Operating Margin
    37.5%
    Q1 FY26

    All-time financial record.

    Cash and Investments Balance
    $400M
    Q1 FY26 end

    Cash reserves maintained for business operations and M&A.

    Dividends Paid
    $20M
    Q1 FY26

    Part of capital allocation strategy.

    Specifying Customers >10% Revenue
    2
    Q1 FY26

    Indicates customer concentration.

    Purchasing Customers >10% Revenue
    1
    Q1 FY26

    Indicates customer concentration.

    UltraFLEXplus Shipments
    more than doubled
    last 9 months

    Reflects rapid capacity ramp while sustaining lead times.

    UltraFLEXplus Lead Times
    12 to 16 weekssustained
    Q1 FY26

    Maintained despite increased shipments.

    Auto Industrial Segment Revenue from Data Center Devices
    46%
    Q1 FY26

    Historically dominated by automotive and industrial devices, now significantly driven by data center.

    HDD Annual Exabyte Growth
    greater than 20%
    annual

    Fueled by AI, translating into longer test times and larger TAM for Teradyne.

    Capital Expenditures
    flatflat YoY
    Q1 FY26

    Expected to increase in Q2 due to investments in innovation and operations scaling.

    First Half Gross Margins
    59.7%
    H1 FY26

    At the low end of the target model range, reflecting normalization after Q1's record.

    Industry KPIs

    8
    MetricValueDetails
    Lead times12 to 16 weeksweeks
    Ai data center revenue70%%
    Market share commentarybalanced
    Fab capacity utilization12 to 16 weeksweeks
    Bookings net order intakefirst multi-system production test ordersorders
    Design wins socket pipelinerobust
    Node platform ramp scheduleMagnum 7
    End market segment revenue mix46%%

    Product announcements

    2
    ProductTypeDetails
    Photon 100launch
    Omnyxlaunch

    Deals & partnerships

    2
    MultiLane Test Productsjoint venture

    Partnership to accelerate development of high-speed I/O and data center interconnect test solutions, critical for AI data centers transitioning architectures.

    TestInsightacquisition

    Leading provider of test development tools used with Teradyne and competing testers. Strengthens Teradyne's design-to-test software capabilities, enabling virtual test environments to reduce time to market for complex AI and networking devices.

    Risks & headwinds

    6
    Business concentration and lumpiness

    Business increasingly concentrated to extremely large vertically-integrated technology companies (hyperscalers, AI ecosystem enablers) and a smaller number of very large ASIC and commercial device programs.

    Mitigation: Diversifying product portfolio to serve needs from wafer to data center; actively competing for new design wins and dual-source status.

    Bottlenecks in other areas of the supply chain

    Could shift demand for Teradyne's products, leading to short-term demand peaks and valleys.

    Mitigation: Multi-source strategy leveraging contract manufacturers for capacity flexibility; working to improve customer satisfaction by serving orders within lead time; focusing on supply chain resilience.

    Mobile segment weakness

    Mobile revenue was roughly flat with Q4 2025 and remains a muted impact.

    Mitigation: Increasing importance of compute in SoC portfolio; focus on other growth drivers like AI, auto, and industrial.

    Memory pricing and availability

    Affecting end market demand, especially outside the iOS ecosystem.

    Mitigation: Strong demand for HBM and DRAM for AI acting as an accelerator; increasing flash test demand driven by SSDs.

    Limited visibility into second half of 2026H2 FY26

    Visibility into the second half is quite limited, with increasing contributions over the midterm period.

    Mitigation: Expanded first-half revenue range (55%-60%) to balance strong demand signals with potential order lumpiness and ecosystem hiccups; working against long-term capacity expansion plans.

    Timing uncertainty for device ramps

    If first silicon doesn't work for an ASIC, it can inject a 2-quarter delay in a ramp, meaningfully affecting timing of growth.

    Mitigation: Focus on long-term growth trajectory rather than short-term timing; working with customers on strategic forecasts.

    Q&A highlights

    8

    Despite strong demand signals, why isn't guidance for the second half of 2026 being raised? Is it due to potential constraints or lumpiness, similar to competitors?

    Michelle Turner explained that the strong Q1 and Q2 guidance led to an expanded first-half revenue weighting (55%-60%). The low end of the range reflects potential timing impacts from large customer ordering patterns or ecosystem bottlenecks in AI data center build-outs. Greg Smith added that VIP compute is heavily first-half weighted, networking has potential upside but less visibility, and memory, IST, Product Test, and Robotics are expected to be more back-half weighted, but with smaller overall impact or inherent lumpiness.

    “The low end of the range really reflects the potential for timing impact. So this is either lumpiness in terms of large customer ordering patterns or it could also be hiccups in the AI data center build out the ecosystem, if you will in terms of when our testers actually get accepted.”

    asked by Timothy Arcuri · answered by Michelle Turner

    2 min read6 chapters

    Detailed Narrative

    01

    AI-Driven Record Performance and Strategic Focus

    Teradyne achieved record Q1 2026 results with $1.282 billion in revenue and $2.56 non-GAAP EPS, significantly exceeding prior records. This performance was primarily driven by AI-related demand, which constituted nearly 70% of the quarter's revenue, up from 60% in Q4 2025. The company's 'wafer to AI data center' strategy, anchored by verticalization, electrification, and AI trends, is delivering demand across its Semiconductor Test, Product Test, and Robotics portfolios.

    02

    Three Waves of AI Opportunity

    The company views the AI opportunity in three superimposed waves. The first wave, focused on general-purpose AI data center capacity build-out, drove significant spend in 2025. Teradyne is now entering the second wave, characterized by investment in compute silicon optimized for inference at scale, expected to grow over the next few years. The third wave, Edge AI and physical AI, is anticipated with advancements in silicon packaging, memory, and AI models, targeting applications like self-driving cars and robotics.

    03

    Merchant GPU and Custom ASIC Penetration

    Teradyne secured its first multi-system production test orders for merchant GPU in Q1, with systems expected to ship and be in production in Q2. The company aims for a long-term market share of 30% to 70% for dual-source customers in merchant GPU, though reaching this will take several years due to the need to convert multiple SKUs. For custom ASICs, Teradyne is actively competing for new programs and dual-source status with existing hyperscalers, with potential ramps expected in 2027.

    04

    Silicon Photonics and Co-packaged Optics (CPO) Market

    Teradyne introduced Photon 100, a new platform for silicon photonics and co-packaged optics testing, based on its UltraFLEXplus tester. This market is in early stages but represents a significant midterm TAM expansion opportunity of $300 million to $700 million per year. The company is collaborating with partners, including ficonTEC, to develop solutions for various test insertions, expecting efficiency to improve tenfold over the next few years.

    05

    New Product Introductions and Strategic Acquisitions

    Beyond Photon 100, Teradyne also launched Omnyx, a new production board test platform for server boards and tray assemblies, designed to address defect detection in AI data center build-outs. The company also closed two inorganic opportunities: the MultiLane Test Products joint venture (April 8) to accelerate high-speed I/O and data center interconnect test solutions, and the acquisition of TestInsight (two weeks prior to call) to strengthen design-to-test software capabilities and reduce time to market for complex AI devices.

    06

    Segment Performance and Outlook

    Semi Test revenue broke the $1 billion threshold for the first time, driven by AI strength in compute and memory. Robotics achieved its fourth consecutive sequential growth quarter, with AI revenue increasing to 15% of its sales. While mobile remains muted, memory test demand is stronger than anticipated, fueled by HBM and DRAM for AI, and flash test demand is rising due to SSDs. Auto and industrial segments show moderate recovery, with ADAS and power for AI data centers driving demand.

    AI-generated summary of the company’s earnings call. Not investment advice.