Nvidia Test Slot May Drive Hundreds of Millions in Revenue for Teradyne: UBS

UBS analysts believe that a potential breakthrough in securing a test slot at Nvidia could be a major catalyst for Teradyne's shares, estimating that even a modest win may drive hundreds of millions of dollars in annual revenue. They estimate that Nvidia's test tool purchases could reach $1.75 billion in 2025, and that Teradyne could capture a small share of that, translating to several $100 million of revenue per year. UBS rates Teradyne shares Buy.

Teradyne, Inc. (TER), a leading global semiconductor company, is expected to report its fiscal second-quarter earnings for 2025 on Wednesday, Jul. 23. The company, valued at $14.7 billion by market cap, designs, manufactures, and markets automated test systems and robotics products. Ahead of the earnings release, analysts anticipate a profit of $0.54 per share on a diluted basis, down 37.2% from $0.86 per share in the year-ago quarter [1].

UBS analysts have highlighted a potential breakthrough in securing a test slot at Nvidia (NASDAQ:NVDA) as a significant catalyst for Teradyne's shares. The analysts estimate that even a modest win could drive hundreds of millions of dollars in annual revenue for Teradyne. Nvidia's test tool purchases via Advantest for its current Blackwell GPU ramp could reach $1.75 billion in 2025, based on assumptions that OSAT partner KYEC is buying around 700 testers at $2.5 million apiece [2][3][4]. If Teradyne captures even a small share of that, it could translate to several $100 million in revenue per year, a substantial upside driver for the company.

Analysts led by Timothy Arcuri at UBS believe that Nvidia is systematically dual-sourcing throughout its supply chain, indicating that the winds of change may be blowing in Teradyne's direction. They point out that Blackwell test times are significantly longer than its predecessor Hopper, due to the more complex packaging involving two compute tiles, adding further weight to the potential revenue contribution from any incremental test wins [2][3][4].

While much of the investor focus on Teradyne still centers on Apple (NASDAQ:AAPL), UBS believes the market is beginning to recognize a broader set of catalysts, including the Nvidia opportunity, Amazon’s adoption of Teradyne’s collaborative robots, and increasing transistor intensity in smartphones as the industry transitions to more advanced nodes [2][3][4].

Teradyne's stock has underperformed the S&P 500 Index’s 13% gains over the past 52 weeks, with shares down 37.1% during this period. Similarly, it significantly underperformed the Technology Select Sector SPDR Fund’s (XLK) 10.7% gains over the same time frame [1]. The company's underperformance is largely due to slowing demand, driven by reducing capital expenditures amid the ongoing impact of tariffs.

Analysts’ consensus opinion on TER stock is moderately bullish, with a “Moderate Buy” rating overall. Out of 15 analysts covering the stock, nine advise a “Strong Buy” rating, one suggests a “Moderate Buy,” three give a “Hold,” one recommends a “Moderate Sell,” and one advocates a “Strong Sell.” TER’s average analyst price target is $97.93, indicating a potential upside of 4% from the current levels [1].

References:
[1] https://www.barchart.com/story/news/33193282/teradyne-s-quarterly-earnings-preview-what-you-need-to-know
[2] https://ca.investing.com/news/stock-market-news/nvidia-test-slot-could-send-this-stock-soaring-ubs-says-4091723
[3] https://www.investing.com/news/stock-market-news/nvidia-test-slot-could-send-this-stock-soaring-ubs-says-4124723
[4] https://uk.investing.com/news/stock-market-news/nvidia-test-slot-could-send-this-stock-soaring-ubs-says-4159197