Teradyne, Inc.

NASDAQ Global Select
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Bullish +65

TER vs. AMAT: Which AI Semiconductor Stock Is the Better Buy?

📈 Teradyne's AI-related demand reached nearly 70% of Q1 2026 revenues, up from 60% the prior quarter.

🚀 New products like the Photon 100 platform target a TAM expansion opportunity of $300 million to $700 million annually.

🤝 Teradyne partnered with Tokyo Electron (TEL) to launch a known good device screening test cell solution for chiplet-based architectures.

📊 Applied Materials expects leading-edge foundry-logic, DRAM, and advanced packaging to drive over 80% of WFE growth in 2026.

🔬 AMAT introduced Trillium ALD and Precision Selective Nitride PECVD to support Gate-All-Around manufacturing.

📦 Applied Materials anticipates packaging revenues will increase by more than 50% in 2026.

🤝 AMAT announced an innovation partnership with TSMC at its EPIC Center to accelerate next-generation semiconductor technologies.

📉 Both stocks skyrocketed over the trailing 12 months, with TER up 373.6% and AMAT up 243%.

💰 Teradyne trades at a forward P/S of 12.93X compared to AMAT's 12.19X.

📈 Teradyne has beaten earnings estimates in all trailing four quarters with an average surprise of 17.05%.

⚠️ AMAT faces headwinds from high China exposure, evolving export rules, and the cyclical nature of capital spending.

🏆 Teradyne holds a Zacks Rank #1 (Strong Buy) while Applied Materials holds a Zacks Rank #2 (Buy).

Bullish Signals
  • Teradyne is benefiting from robust growth in semiconductor test and robotics divisions driven by accelerating AI and data center demand.
  • The company's new Photon 100 platform addresses critical needs in AI data center build-outs with a potential TAM expansion of $300M-$700M/year.
  • Teradyne's partnership with Tokyo Electron creates a flexible open ecosystem for high-quality device screening in advanced packaging flows.
  • Applied Materials is seeing broadening AI adoption pushing wafer fab equipment spending toward leading-edge foundry-logic, DRAM, and advanced packaging.
  • AMAT's new Trillium ALD and PECVD products aim to improve transistor performance and lower power consumption for next-gen chips.
  • Advanced packaging revenues at Applied Materials are projected to increase by more than 50% in 2026 due to complex AI processor demands.
  • Strategic partnerships with TSMC, Samsung, SK hynix, and Micron strengthen AMAT's position in the AI infrastructure cycle.
  • Teradyne has delivered an average earnings surprise of 17.05% over the trailing four quarters, significantly outperforming its consensus.
Risk Factors
  • The semiconductor market is inherently cyclical, creating uncertainty for capital spending patterns affecting Applied Materials.
  • Both Teradyne and AMAT shares are currently considered overvalued based on a Value Score of F.
  • Teradyne trades at a higher forward Price/Sales ratio (12.93X) compared to Applied Materials (12.19X), suggesting a premium valuation.
Full Analysis
The article compares Teradyne (TER) and Applied Materials (AMAT) as AI semiconductor stocks, concluding that Teradyne offers greater upside potential due to stronger AI exposure and faster earnings growth. Teradyne's AI-related demand accounted for nearly 70% of its Q1 2026 revenues, driven by new platforms like the Photon 100 for silicon photonics and the Omnyx production board test platform. Applied Materials is also benefiting from the AI cycle, with leading-edge foundry-logic, DRAM, and advanced packaging expected to drive over 80% of its year-over-year growth in 2026. The company introduced new products like Trillium ALD and anticipates packaging revenues to increase by more than 50% in 2026, supported by partnerships with TSMC, Samsung, SK hynix, and Micron. Both stocks have significantly outperformed over the trailing 12 months, rising 373.6% for Teradyne and 243% for AMAT. However, Teradyne trades at a higher forward Price/Sales ratio (12.93X vs. 12.19X) and has a higher Zacks Rank #1 compared to AMAT's Rank #2. Analysts note that while both are well-positioned, Teradyne's earnings surprise average is significantly higher at 17.05% versus AMAT's 6.06%.