Nvidia's Partnership Opportunity with Teradyne Could Boost the Semiconductor Testing Firm's Revenue

Teradyne, a semiconductor testing firm, may see a boost from Nvidia as a second-source tester. UBS analysts believe Nvidia is dual-sourcing its supply chain, and Teradyne could benefit from this. Landing a 10% share of Nvidia's business could add hundreds of millions in annual revenue. Teradyne's shares have declined 11% over the past 52 weeks but have risen 45% in the past three months.

Semiconductor testing firm Teradyne (TER) may see a significant boost from Nvidia (NVDA) as a potential second-source tester. UBS analysts have suggested that Nvidia could be dual-sourcing its supply chain, presenting an opportunity for Teradyne. Landing even a modest 10% share of Nvidia's business could add several hundred million dollars in annual revenue for Teradyne.

Teradyne, incorporated in 1960 and headquartered in North Reading, Massachusetts, provides automated test equipment and advanced robotics systems. The company offers testing solutions for semiconductors and electronic products, with a market capitalization of $18.8 billion. Teradyne has faced a decline in stock performance over the past year, with shares down 11% over the past 52 weeks. However, the stock has experienced a resurgence, rising by 45% in the past three months [1].

UBS analysts led by Timothy Arcuri believe that securing a small slice of Nvidia's business could provide meaningful upside for Teradyne. The increased complexity of Nvidia's Blackwell chips, with longer test times due to their dual compute tile architecture, could translate to greater revenue potential for Teradyne. The analysts suggest that investors are beginning to recognize a broader set of catalysts for Teradyne, with Nvidia potentially being a key driver [1].

Analysts overall are optimistic about Teradyne's prospects, with a consensus "Moderate Buy" rating. Nine analysts have rated the stock a "Strong Buy," while six analysts are playing it safe with a "Hold" rating. The consensus price target of $117.83 is roughly in line with the current share price, but the Street-high price target of $133 indicates 13% upside [1].

Nvidia's record-breaking Q2 revenue of $46.7 billion, with two unidentified customers contributing 39% of the total, raises questions about the company's future prospects and potential risks. However, industry analysts remain optimistic about Nvidia's prospects, given its technological edge in AI chips and the continued bullish sentiment around AI technology [2].

Despite facing challenges in the Chinese market, Nvidia's strong performance with its top customers suggests a degree of resilience. The company's ability to maintain and diversify its customer base will be crucial for sustained growth and stability in the rapidly evolving AI market [2].

References:
[1] https://www.barchart.com/story/news/34511487/nvidia-could-give-this-under-the-radar-ai-stock-a-major-boost
[2] https://theoutpost.ai/news-story/nvidia-s-q2-revenue-surge-two-mystery-customers-account-for-39-of-46-7-billion-19727/