Analyst(s): Brendan Burke
Publication Date: August 3, 2026
Teradyne posted its second straight record quarter in Q2 FY 2026 as AI-driven demand lifted all three business groups, led by semiconductor test for compute and memory. A Q3 outlook beat and rising wafer fab equipment investment point to a multi-year growth phase for automated test.
What Is Covered in This Article:
- Teradyne’s Q2 FY 2026 financial results
- AI compute and memory drive semi test revenue
- Networking, storage, and packaging tailwinds
- Product Test and Robotics extend data center momentum
- Guidance and Final Thoughts
The News: Teradyne (NASDAQ: TER) reported financial results for its fiscal second quarter of 2026. Revenue was $1.33 billion, up 104% year on year (YoY) and 4% sequentially, versus consensus of $1.22 billion. By segment, Semiconductor Test revenue was $1.12 billion (up 128% YoY), Product Test revenue was $107 million (up 26% YoY), and Robotics revenue was $100 million (up 33% YoY). Non-GAAP gross margin was 59.8%, and non-GAAP operating income was $448 million for an operating margin of 33.7%. Non-GAAP net income was $389.0 million, and non-GAAP diluted earnings per share (EPS) was $2.47, up from $0.57 a year earlier. Record memory test revenue and a resurgence in NAND final test helped push results past the high end of guidance.
“Our strategy to capture test and robotics opportunities from wafer to AI data center has driven another record quarter,” said Teradyne CEO Greg Smith. “In the short term, our Q3 guidance reflects robust AI-related demand. Looking further ahead, rapid increase in wafer fab equipment investment sets the stage for continued growth in 2027 and beyond.”
Teradyne Q2 FY 2026 Earnings Double on AI Test Demand and Record Memory
Analyst Take: Teradyne had the kind of quarter that resets expectations for automated test equipment. Revenue more than doubled year over year, every business group grew, and more than 60% of revenue now traces to AI, validating the company’s wafer-to-AI-data-center framing. After a decade in which chip-making equipment outgrew test, that relationship reversed in 2024, and test is now expanding faster. Rising wafer fab equipment spend, denser process nodes, and heavier test intensity from advanced packaging are all pulling in the same direction. The near-term risk is lumpiness in compute orders, but the setup into 2027 looks stronger than anything Teradyne has guided to in years.
Compute and Memory Turn Semiconductor Test into a Record Engine
Semiconductor Test revenue reached $1.12 billion, up 128% year over year, split into $843 million of system-on-chip (SOC), $212 million of memory, and $67 million of integrated system test. Compute now makes up 70% of SOC revenue and grew nearly 600% year over year on AI accelerators, CPUs, and networking. Memory set another record above $200 million for a third straight quarter on HBM and DRAM demand plus a NAND final-test resurgence, with book-to-bill running above two. Teradyne shipped its first merchant GPU order and completed correlation at a second hyperscaler, steps that widen its compute customer base and set up share gains in 2027. Management sized the 2026 memory test market at more than 40% above 2025, weighted toward the second half. Teradyne has moved from a cyclical test supplier to a direct beneficiary of AI compute and memory buildout, with the customer diversification to sustain it.
Networking, Storage, and Advanced Packaging Extend the Market
Beyond core compute, Teradyne is chasing the test content that AI clusters create in networking, storage, and packaging. Frontier models demand ever-larger accelerator clusters, driving growth across scale-up, scale-out, and scale-across networking, which prompted the Quantifi Photonics acquisition, the Photon 100 optical solution, and the MultiLane Test Products joint venture for copper interconnect. The company expects co-packaged optics alone to become a $300 million to $700 million market by 2028. Its integrated system test business, tied to AI-driven HDD demand from all three major suppliers, grew 94% year over year and is riding better than 20% annual exabyte growth. Advanced packaging adds another lever, since chiplets, stacked memory, and eventual co-packaged optics raise the cost of a single latent defect and push test intensity per device higher. These adjacencies turn one AI server into test demand at many points along the value chain rather than a single socket.
Product Test and Robotics Ride the Data Center Buildout
Product Test revenue grew 26% year over year to $107 million on broad strength across board test, optical test, defense and aerospace, and scale-up networking. The new Omnyx production board-test platform, aimed at catching defects earlier in AI data center builds, began shipping in the quarter with strong initial demand. Robotics revenue rose 33% year over year to $100 million, and its electronics manufacturing and semiconductor segment, which includes data centers, jumped 50% sequentially to become the group’s largest end market. Teradyne is also reshoring some robotics production, with US sales climbing to 32% of the group and a domestic manufacturing center due to open later this year. The common thread is that more data center construction drives more rack shipments, lifting demand at the contract manufacturers and design houses these two groups serve. Both businesses give Teradyne a way to monetize the same AI buildout well outside its traditional semiconductor test base.
Guidance and Final Thoughts
Teradyne guided third-quarter revenue to $1.20 billion to $1.30 billion, far above consensus near $1.04 billion, with non-GAAP EPS of $1.85 to $2.15, gross margin of 58% to 59%, and a non-GAAP operating margin of 28% to 30%. It nudged first-half weighting down to 50% to 52% of annual revenue, signaling a stronger second half led by memory, auto and industrial, storage, Product Test, and Robotics, partly offset by softer mobile and compute order timing. Longer term, management pointed to wafer fab equipment spending approaching $250 billion by the end of the decade and a path for the automated test market to reach or exceed $20 billion. Teradyne is spending into that outlook now, raising R&D and go-to-market investment for 2027 rather than maximizing near-term margin. Free cash flow of $378 million in the quarter and $517 million in cash give it room to fund that expansion and keep pursuing acquisitions. Teradyne is positioning to capture AI demand from the wafer to the data center rack.
See the full press release on Teradyne’s Q2 FY 2026 financial results on the company website.
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Author Information
Brendan is Research Director, Semiconductors, Supply Chain, and Emerging Tech. He advises clients on strategic initiatives and leads the Futurum Semiconductors Practice. He is an experienced tech industry analyst who has guided tech leaders in identifying market opportunities spanning edge processors, generative AI applications, and hyperscale data centers.
Before joining Futurum, Brendan consulted with global AI leaders and served as a Senior Analyst in Emerging Technology Research at PitchBook. At PitchBook, he developed market intelligence tools for AI, highlighted by one of the industry’s most comprehensive AI semiconductor market landscapes encompassing both public and private companies. He has advised Fortune 100 tech giants, growth-stage innovators, global investors, and leading market research firms. Before PitchBook, he led research teams in tech investment banking and market research.
Brendan is based in Seattle, Washington. He has a Bachelor of Arts Degree from Amherst College.
