Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 28, 2026 · Beat 7 of last 7 quarters
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Teradyne's record quarter underscores the AI infrastructure buildout's breadth, with AI driving growth across semiconductor test, product test, and robotics. The company's wafer-to-data-center strategy positions it to capture value from the entire AI data center supply chain, from silicon to racks. Management's confidence in multiyear ATE TAM growth to $20B signals sustained investment in test capacity, a key enabler for AI compute scaling.
Teradyne delivered record revenue of $1.329B and EPS of $2.47, beating guidance. AI-driven revenue exceeded 60% of total. Semi Test revenue was $1.122B, with compute up nearly 600% YoY. Memory revenue hit a record $212M with book-to-bill over 2x. Product Test grew 26% YoY, Robotics grew 33% YoY. Gross margin was 59.8%, operating margin 33.7%. Free cash flow was $351M in the quarter, $579M in H1.
Management raised confidence in a multiyear AI-driven growth phase, citing WFE CapEx approaching $250B and ATE TAM potentially reaching $20B by end of decade. They expect 2027 to be another year of healthy growth, with a resurgence driven by ATE TAM expansion and share gains. Q3 guidance: revenue $1.2B-$1.3B, EPS $1.85-$2.15, gross margin 58%-59%. They narrowed first-half revenue weighting to 50%-52% of annual revenue, with second-half growth in memory, auto/industrial, IST, product test, and robotics, offset by mobile softness and compute order timing. They plan to update the target earnings model in Q4.
“For the second quarter in a row, we delivered record revenue and once again AI was the driver.”
on Record revenue
“The result after more than a decade of semi cap equipment outgrowing the test TAM, the trend reversed in 2024 and test is now outpacing fab equipment.”
on ATE TAM inflection
“Our wafer-to-data-center strategy is working. Our optimism around 2026, 2027 and through the midterm has grown.”
on Strategy confidence
Is 8% the right ratio of test to WFE? What are the puts and takes?
Gregory noted the ratio has risen from 4% in 2023 to 8% in 2026, and expects it to settle in the 7%-9% range, not continue upward.
What is driving the gross margin headwind in Q3 guidance?
Michelle explained normal quarter-to-quarter variability, product mix shift (more auto/industrial, IST, robotics, product test), new product introductions, and memory pricing pressure. Full-year gross margin expected around 59%, just shy of target model.
How should we think about memory test growth relative to bit growth and 2027 lumpiness?
Gregory said memory test growth is driven by both bit growth and technology shifts (HBM3 to HBM4, DDR5 to DDR6). He expects no particular lumpiness in 2027 as capacity adds are planned further out.