TER vs. MKSI: Which Semiconductor Stock Is a Better Buy Now?
Teradyne TER and MKS MKSI are major players in the semiconductor market. While TeradyneTER-- focuses on semiconductor test equipment and automation solutions, MKSMKSI-- provides critical subsystems and process technologies used in chip manufacturing, with both benefiting from semiconductor industry demand.
The semiconductor industry’s global sales continue to gain momentum. In March 2026, the Semiconductor Industry Association (SIA) reported a 3.7% month-over-month increase and 46.1% year-over-year growth in global semiconductor sales for January 2026. January’s monthly sales were the highest ever in the semiconductor industry’s history. SIA represents 99% of the U.S. semiconductor industry by revenues and nearly two-thirds of non-U.S. chip firms. Both TERTER-- and MKSIMKSI-- are expected to benefit from this rapid growth pace.
So, TER or MKSI — Which of these semiconductor stocks has the greater upside potential? Let’s find out.
The Case for TER Stock
Teradyne is benefiting from the growing demand for AI infrastructure, which is driving robust growth across its semiconductor test division. In the fourth quarter of 2025, Semiconductor Test revenues were $883 million, accounting for approximately 81.5% of total sales. This reflects 45% year-over-year growth and a 46% sequential increase compared with the third quarter of 2025.
The semiconductor test segment, particularly the System-on-Chip (SoC) and memory test divisions, has shown impressive year-over-year growth. In 2025, SoC test revenue grew 23% year over year, driven by networking and VIP compute, while memory test revenue saw slight growth in a flat market, supported by share gains in high-bandwidth memory and DRAM final tests.
Compute has emerged as the largest component of Teradyne’s revenue, increasing 90% year over year in 2025, a shift from its previous reliance on mobile applications. This transition reflects the company's strategic pivot to capitalize on AI-driven demand in high-performance computing.
Teradyne expects robust growth in the semiconductor test market, particularly in the compute segment, which is projected to expand significantly due to the rapid build-out of AI data centers and growth of edge AI. The company anticipates that the compute segment will drive a substantial portion of its revenue in 2026, with AI applications accounting for up to 70% of its revenue in the first quarter of 2026.
The Case for MKSI Stock
MKS benefits from strong demand in the semiconductor market. In the fourth quarter of 2025, revenues from the Semiconductor market increased 8.7% year over year to $435 million. Sequentially, it increased 5%.
Growth in the Semiconductor market was primarily fueled by strengthening demand in DRAM, logic and foundry applications, as well as robust order activity in plasma and reactive gases products. Growth is further fueled by the rising adoption of artificial intelligence (AI), which is driving investments in high-bandwidth memory and advanced logic applications.
The company’s semiconductor business has consistently outperformed the wafer fab equipment (WFE) market growth. This shows its ability to capitalize on rising industry spending. MKSI’s wide range of designed-in products includes subsystems for etch and deposition applications, dissolved gases for advanced logic applications and back-end applications for high-bandwidth memory. This positions it as an important player in the semiconductor industry.
The semiconductor industry is poised for significant growth, driven by AI, memory investments, and increased WFE spending, with MKS well-positioned to capitalize on these opportunities. MKSI expects first-quarter 2026 semiconductor revenues to be up on a sequential basis.
Price Performance and Valuation of TER and MKSI
In the trailing six-month period, shares of Teradyne and MKSI have appreciated 122% and 82.5%, respectively. The outperformance in Teradyne stock can be attributed to strong AI-related demand, which is driving significant investments in cloud AI build-out as customers accelerate production of a wide range of AI accelerators, networking, memory and power devices.
Despite MKSI’s expanding portfolio, the company’s performance may be impacted by the seasonal slowdown during the Lunar New Year holiday and continued softness in the industrial segment of its Specialty Industrial market.
TER and MKSI Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, Teradyne and MKS shares are currently overvalued, as suggested by a Value Score of F and D, respectively.
In terms of forward 12-month Price/Sales, TER shares are trading at 11.03X, higher than MKS’s 3.43X.
TER and MKSI Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for TER & MKSI?
The Zacks Consensus Estimate for TER’s 2026 earnings is pegged at $5.91 per share, unchanged over the past 30 days. This indicates a 49.24% increase year over year.
The Zacks’ Consensus Estimate for MKSI’s fiscal 2026 earnings is pegged at $9.85 per share, which has increased 9.44% over the past 30 days. This indicates a 25% increase year over year.
Teradyne earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average surprise of 17.46%. MKS earnings beat the Zacks Consensus Estimate in all the trailing three quarters, while missing the same once, delivering an average surprise of 9%. The average surprise of Teradyne is higher than that of MKSI.
Conclusion
While both Teradyne and MKSI stand to benefit from the booming Semiconductor market, Teradyne offers a greater upside potential due to its robust and diversified portfolio to meet the rising demand for AI-driven technologies, which is contributing to its growth prospects continuously, driving top-line growth.
Despite MKSI’s expanding portfolio, the company is facing continued softness in the industrial segment and relatively slower earnings momentum, which is a headwind.
Currently, Teradyne sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than MKSI, which has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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