Teradyne, Inc. (TER): A Bull Case Theory 

We came across a bullish thesis on Teradyne, Inc. on Deep Value Returns’s Substack. In this article, we will summarize the bulls’ thesis on TER. Teradyne, Inc.’s share was trading at $249.53 as of February 2nd. TER’s trailing and forward P/E were 90.74 and 47.17, respectively according to Yahoo Finance.

Teradyne, Inc. designs, develops, manufactures, and sells automated test systems and robotics products in the United States and internationally. TER has entered a new earnings regime following guidance that materially exceeded market expectations, underscoring a powerful inflection in demand for semiconductor test equipment tied to the accelerating AI hardware cycle. Despite the stock jumping more than 20% premarket on the announcement, the market continues to underestimate the durability and magnitude of this shift.

Teradyne’s core business—manufacturing the machines that test chips before shipment—sits squarely at a critical bottleneck in the semiconductor value chain, making it a direct beneficiary of rising complexity, higher performance requirements, and increased volumes driven by AI workloads. As chip architectures become more advanced, testing intensity and value per wafer rise, structurally lifting Teradyne’s earnings power.

The company’s outlook reflects this dynamic clearly, with guidance coming in far above analyst estimates and signaling that AI-related hardware demand is not a short-lived spike but part of a broader multi-year cycle that is likely to intensify into 2026.

This reinforces the view that the market is still anchored to outdated assumptions about cyclicality, failing to fully price in a structurally higher baseline for revenue, margins, and cash generation. Within this context, Teradyne stands out as a high-quality way to gain exposure to the AI infrastructure buildout without taking direct chip design risk.

Even after the sharp share price reaction, valuation remains compelling relative to the company’s long-term earnings trajectory and strategic positioning. The stock continues to trade at levels that do not reflect the scale of the opportunity now emerging, particularly as AI-driven demand becomes a dominant growth driver.

As a result, Teradyne offers an attractive risk-reward profile, with a clear path to significant upside. Based on the strength of the guidance and the durability of the underlying trends, a price target of $435 by mid-2027 appears achievable, making the stock a compelling buy at current levels.

Previously, we covered a bullish thesis on Lam Research Corporation (LRCX) by The Antifragile Investor in May 2025, which highlighted the company’s irreplaceable semiconductor process tools, high-margin services flywheel, and deep moats across leading global fabs. LRCX’s stock price has appreciated by approximately 186.87% since our coverage due to strong demand for advanced semiconductor manufacturing equipment. Deep Value Returns shares a similar view but emphasizes AI-driven testing intensity, guidance upside, and a new earnings regime at Teradyne.

Teradyne, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 58 hedge fund portfolios held TER at the end of the third quarter which was 60 in the previous quarter. While we acknowledge the risk and potential of TER as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TER and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.