Episode Details

Teradyne, Inc. (TER) Q2 2026 — Teradyne, Inc. (TER), one of the two companies that dominate automated semiconductor test equipment alongside Advantest of Japan, reported Q2 2026 (quarter ended June 28, 2026) after the close on July 28. Revenue was $1.329B, +103.9% YoY from $651.8M and up 3.6% sequentially, exceeding the high end of the company's own guidance and marking a second consecutive quarter of record revenue. GAAP gross margin was 59.8% versus 57.2% a year ago; GAAP income from operations was $437.8M (32.9% margin) versus $90.7M (13.9%); GAAP net income attributable to Teradyne $374.5M, or $2.38 per diluted share versus $0.49; non-GAAP net income $389.0M, or $2.47 per diluted share versus $0.57. Revenue split: Semiconductor Test $1,122M (84% of total), Product Test $107M, Robotics $100M. Management's headline attributed the quarter to record Memory revenue driven by continued strength in DRAM and a resurgence in NAND final test; CEO Greg Smith said all three business groups saw year-on-year market expansion and that a rapid increase in wafer fab equipment investment sets the stage for continued growth in 2027 and beyond. First half 2026: revenue $2.611B versus $1.337B, GAAP diluted EPS $4.91 versus $1.10. Q3 2026 guidance is revenue of $1,200M to $1,300M with GAAP diluted EPS of $1.79 to $2.09 and non-GAAP diluted EPS of $1.85 to $2.15. Balance sheet: cash $349.5M plus marketable securities of $167.6M against zero debt (the $200M of short-term borrowings outstanding at December 31 was repaid, and a $300M revolver draw within the quarter was repaid within the quarter); equity method investment carried at $515.0M. Q2 operating cash flow $469.1M versus $182.1M, capital expenditures $90.7M versus $50.4M, implying free cash flow of about $378M; first-half operating cash flow $734.3M and capex $155.4M for roughly $579M of free cash flow. The quarterly dividend was $0.13 per share. The under-covered numbers: first, non-GAAP operating margin FELL from 37.5% to 33.7% sequentially and non-GAAP operating income declined in absolute dollars from $480.4M to $448.3M on $46.5M MORE revenue, because operating expenses rose $48.9M (S&A +15%, E&D +15%) — a negative sequential incremental margin at record revenue, partly reflecting the MultiLane Test Products joint venture that closed in the quarter and added $142.8M of goodwill and a $36.2M noncontrolling interest. Second, sequential revenue growth has decelerated from +41% to +18% to +3.6%, and the Q3 guide midpoint of $1,250M is DOWN about 6% sequentially with non-GAAP EPS falling 19% from $2.47 to about $2.00. Third, Teradyne repurchased only $74.2M of stock in the first half of 2026 versus $274.9M in the first half of 2025 — a 73% cut while the shares tripled. The stock closed at $90.15 a year ago, reached a $483.84 closing high on June 30, 2026, opened at about $367.90 on July 29 (up nearly 15% on the print) and traded back near $333 by mid-morning, erasing the entire gap. Teradyne just reported the best growth quarter in its modern history and the market refused to pay for it. Q2 2026 (quarter ended June 28): revenue $1.329 billion, up 103.9% year over year and above the high end of the company's own guidance; GAAP gross margin 59.8% versus 57.2%; operating income $437.8 million versus $90.7 million, a 32.9% operating margin against 13.9%; non-GAAP EPS $2.47 versus $0.57 and GAAP EPS $2.38 versus $0.49. Semiconductor Test was $1,122 million of the total, about 84% of the company, driven by record memory revenue on DRAM strength and, in management's own words, a resurgence in NAND final test. September guidance of $1.20 to $1.30 billion of revenue and $1.85 to $2.15 of non-GAAP EPS landed far above a Street sitting near $1.06 billion and $1.55. The stock opened up almost 15% at roughly $368 — and gave the entire gap back within the hour, trading near $333. So why are we not buying? Because of three numbers almost nobody wrote about. First, compare this quarter to LAST quarter inste