Shares of Teradyne (NASDAQ: TER) surged 13.6% in after-hours trading Tuesday, reaching $364.28 and recovering from a 4.2% decline in the regular session. The jump came after the company reported second-quarter results that exceeded consensus estimates and issued third-quarter guidance that was roughly 20% above analyst forecasts.
The company reported record quarterly revenue of $1.329 billion, surpassing consensus estimates by 8.9%. Adjusted earnings per share came in at $2.47, compared to just $0.57 in the same period last year, representing an 18.2% beat over the $2.09 consensus. The results were driven by strong demand for semiconductor test equipment, particularly related to artificial intelligence applications.
Teradyne's guidance for the third quarter was the primary catalyst for the after-hours surge. The company expects revenue of approximately $1.25 billion at the midpoint, which is roughly 20% higher than the LSEG consensus estimate of $1.04 billion. Adjusted EPS guidance of $2.00 also beat the consensus of $1.53 by 30.7%.
Based on the midpoint of guidance, early estimates suggest nine-month revenue of approximately $3.86 billion, an increase of 21% compared to full-year 2025. This indicates a higher minimum revenue level for the near term and suggests that demand for AI-related testing is outpacing analyst forecasts.
Revenue for the second quarter increased 104% year-over-year to $1.329 billion. The Semiconductor Test segment accounted for $1.122 billion, representing 84% of total revenue. However, sales growth over the previous quarter was more diversified, with Product Test climbing 34% and Robotics advancing 10%, contributing nearly 75% of the quarterly sales gain. This breadth is significant as the main test unit showed minimal growth since March.
Despite the strong revenue growth, profit conversion eased. Gross margin decreased to 59.8% compared with 60.9% in the prior period, while non-GAAP operating margin declined to 33.7% from 37.5%. The company attributed this to product mix and higher costs.
Chief Executive Greg Smith stated, "Our Q3 guidance reflects robust AI-related demand." He attributed future growth to increased investment in wafer-fabrication equipment, which is expected to drive further demand for Teradyne's test solutions.
The stock finished the regular session at $320.65, posting its third consecutive loss, while the S&P 500 rose 0.2% and the Nasdaq slipped 0.2%. Risks to the outlook include a 6% sequential decline in Q3 revenue implied by the midpoint, margin softening, and potential volatility from customer delays, tariffs, and export controls. The earnings call is scheduled for 08:30 EDT on Wednesday, where investors are expected to focus on memory demand, profit margins, and order timing in the second half.
