Has Teradata's Turnaround Gained Sustainable Momentum?

The question on every investor's mind about Teradata (TDC) is whether its recent margin expansion and strategic pivot to AI and cloud analytics signal a durable turnaround-or if it's just a temporary reprieve in a long-term revenue slump. Let's dissect the numbers, the strategy, and the valuation to see if this stock is worth the risk.

Margin Expansion: A Glimmer of Hope

Teradata's Q3 2025 results showed a , . This improvement was driven by cost discipline and a strategic shift in its services business toward higher-margin AI and consulting work as reported. Public Cloud ARR, a critical metric for recurring revenue, , signaling progress in its cloud transition. CEO emphasized the company's pivot to an "autonomous AI and knowledge platform," including tools like the Enterprise Vector Store and Teradata AgentBuilder as per the report. These moves suggest Teradata is positioning itself to capitalize on the AI boom, a sector where margins can be significantly higher.

Revenue Stagnation: A Lingering Shadow

Despite the margin gains, . While the company raised its full-year Adjusted EPS guidance , this optimism is tempered by long-term projections. according to projections, roughly in line with its last 12 months of performance. That's a stark contrast to the 15% annual revenue growth forecast for the broader tech sector as analysts note. as reported, but without top-line growth, even strong earnings per share can feel hollow.

Valuation Dislocation: Is This a Bargain or a Trap?

Here's where the intrigue deepens. As of November 5, 2025, , metrics that look cheap compared to peers like Nebius Group, which . The cloud/data analytics sector's EBITDA multiples are also telling: B2B SaaS companies trade at 11x EBITDA for the $3–$5M range as industry data shows, while in Q2 2025. If the company can sustain its margin expansion, its current valuation might reflect a discount rather than a flaw.

But here's the rub: Teradata's revenue stagnation raises questions about whether its margin gains can offset a lack of growth. A 9x P/E is attractive, but if the company can't scale its AI-driven offerings, the market may not reward it for long.

The Verdict: A Cautious Bull Case

Teradata's margin expansion and AI strategy are undeniably compelling. The company is betting big on , which . If that materializes, the 11% Public Cloud ARR growth could accelerate. However, the lack of revenue traction and the shadow of industry outperformance make this a high-conviction call.

For now, Teradata looks undervalued, but investors must ask: Is the market pricing in a realistic path to growth, or is it discounting the risk of another stumble? The answer may hinge on whether its AI pivot can translate into meaningful revenue gains in 2026.