Teradyne, Inc.

Teradyne reported Q3 revenue of more than $1.3 billion, up 70% year over year, and non-GAAP EPS of $2.29, up over 150% year over year. Gross margin was 59.1%, up 60 basis points year over year, and non-GAAP operating income was $413 million with a 31.6% operating margin. For the first nine months of 2026, revenue was $3.9 billion and non-GAAP EPS was $7.31, up over 85% and 235% year over year, respectively. Q4 guidance calls for revenue of $1.25 billion to $1.35 billion and non-GAAP EPS of $1.95 to $2.25, with gross margin expected at 57.5% to 58.5% and operating expenses at 28.5% to 29.5% of sales. Management said the Q4 midpoint of $1.3 billion implies about 20% growth year over year and would put full-year revenue at approximately $5.2 billion, up over 60%.

Gregory Smith framed the quarter as another AI-driven inflection point, saying Teradyne’s wafer-to-data-center strategy is “delivering results.” He emphasized that demand is broadening across semis, networking, memory, storage, power, and robotics, and highlighted new products aimed at next-generation AI devices, optical test, and edge AI. His tone was confident and constructive, with repeated references to prolonged growth opportunities and a “rising tide” from AI.

Michelle Turner said both revenue and non-GAAP EPS came in above the high end of guidance, with margins and cash generation remaining strong. She cited Q3 gross margin of 59.1%, non-GAAP operating income of $413 million, free cash flow of $227 million, cash and investments of $625 million, $20 million of dividends, and $99 million of buybacks. She also said 2026 investment will be close to $1 billion across R&D and CapEx, and noted the company ended the quarter with higher inventory to support future growth and longer supplier lead times.

Analysts focused on how to model memory, gross margins, inventory, and the timing of 2027 growth. Management said memory should stay strong in Q4 and that HBM is likely to be the main driver of memory growth in 2027, while also noting product test is accretive to margins and that 2027 gross margins will face both headwinds and tailwinds. On inventory and hyperscaler timing, management said the build reflects both preparation for 2027 and longer component lead times, and that some ASIC programs will be back-half loaded, but overall 2027 should still be a strong year.