Robots get the headlines at Teradyne (NASDAQ:TER). Chip testers pay the bills. In the second quarter of 2026, the company’s robotics arm brought in $100 million. Its semiconductor test business brought in $1.12 billion over the same three months.
That split matters, because the stock isn’t cheap. Teradyne builds the machines that check chips for defects before they ship, a step every AI processor and memory chip has to clear. It also owns Universal Robots, a maker of collaborative robot arms (cobots, built to work beside people) found on factory floors around the world. That operational momentum earns the stock a spot among the 10 High-Beta Stocks with Strong Revenue Growth. So what are investors actually paying for at 44 times expected earnings? The answer depends less on the robots than on how long the testing boom lasts.
AI Keeps the Testers Busy
The second quarter was Teradyne’s second straight record. Revenue hit $1.33 billion, up 104% from $652 million a year earlier, and beat the top of management’s own guidance. Adjusted (non-GAAP) earnings per share came in at $2.47, against $0.57 a year before.
Memory was a big driver. Teradyne posted record memory revenue on continued DRAM strength and a revival in NAND final test, the last check flash chips get before shipping. The AI build-out is clearly pulling on more than just processors; a tailwind memory chipmakers like Micron are riding too.
Pricing power shows up in the margins. Gross margin came in at 59.8%, and CEO Greg Smith said rising wafer fab equipment spending sets the company up for growth in 2027 and beyond.
The Robot Bet Gets Real
Robotics is small, but it’s no longer just about arms. At the Automate trade show earlier this year, Teradyne Robotics showed off what it calls production-ready physical AI, robots that adapt to messy surroundings instead of repeating one motion. Its first physical AI product, the MiR1200 Pallet Jack, is already for sale.
The more telling detail was who else showed up. Partners demonstrated AI bin picking from Vention, imitation-learning tools built with Scale AI, and dual-arm robots threading copper cables into server racks, all running on Universal Robots hardware. Teradyne also taps Nvidia’s GR00T model and Isaac Sim simulation software. When outside developers build on your arms, the platform starts to look like a standard, which keeps Teradyne in the conversation about robotics stocks betting on physical AI.
Has the Testing Cycle Peaked?
Here’s the worry. Teradyne guided third-quarter revenue to $1.2 billion to $1.3 billion, below the record $1.33 billion it posted in the second quarter. Adjusted EPS guidance of $1.85 to $2.15 also sits under the second quarter’s $2.47. Gross margin had already slipped to 59.8% from 60.9% in the first quarter.
Chip testing has always been cyclical, and a step down after a record can be the first sign of a plateau. Robotics, at $100 million a quarter, is far too small to cushion a semiconductor slowdown. Management’s guidance still credits strong AI-related demand, though, and its 2027 outlook doesn’t read like a company bracing for a bust. One softer quarter wouldn’t break the story. Two in a row would, leaving valuation-conscious investors looking elsewhere, as Teradyne misses out on the 10 Best Affordable Stocks to Buy According to Wall Street Analysts.
A Premium on a Premium
At 44.29 times forward earnings, as of October 12, Teradyne trades well above the sector’s 23.29. It also sits above its own five-year average of 35.27, so investors are paying up even by Teradyne’s standards.
Growth is the defense. Analysts expect earnings to grow 28.17% in 2027. That’s fast, but it doesn’t fully explain a multiple this far above the stock’s own history. The price assumes AI testing demand keeps rolling for years and that robotics eventually becomes a real earnings contributor rather than a side story. It’s the same tension running through AI chip equipment stocks, where booming orders meet stretched multiples.
Short interest sits at 6.38% of the float, meaning a noticeable slice of traders is betting the rally has gone too far. Hedge funds moved the other way, with 82 holding the stock in the most recent quarter, up from 80 in the prior one.
What the Price Really Buys
The evidence says investors are paying for the testing boom, with robotics as an option on top. That boom is real, and the 2027 growth forecast gives the premium some cover. The setup suits growth investors who can stomach chip-cycle swings and believe AI test demand lasts into 2027. If the third quarter lands inside guidance and management holds its 2027 view, 44 times earnings looks defensible. A second straight sequential decline, or fading memory strength, would make it look like peak pricing.
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