Nvidia's Potential Significant Surge for an Under-the-Radar Artificial Intelligence Company
Teradyne (TER), a semiconductor testing firm headquartered in North Reading, Massachusetts, has seen a resurgence in its stock performance over the past three months, with a 45% increase. Despite a 11% decline over the past 52 weeks, the Street-high price target of $133 indicates a 13% upside, while the consensus price target remains at $117.83.
Teradyne is an ATE partner for artificial intelligence (AI) device manufacturers and offers automated test equipment and advanced robotics systems. The company's potential partnership with Nvidia could be a significant tailwind, as UBS analysts believe Teradyne could potentially be a second-source tester for chip industry leader Nvidia (NVDA).
Nvidia is actively involved in AI-optimised SoC validation and is seeking advanced test solutions, similar to other semiconductor companies collaborating with test equipment providers. This collaboration could lead to increased demand for Teradyne's test systems for Nvidia's complex AI chips.
UBS estimates that landing even a 10% share of Nvidia's business could add several hundred million dollars in annual revenue for Teradyne. Any incremental test wins for Teradyne with Nvidia could translate to even greater revenue potential.
Wall Street analysts have a consensus "Moderate Buy" rating for Teradyne. While six analysts rate the company with a "Hold" rating, nine analysts rate it as a "Strong Buy". One analyst rates Teradyne with a "Strong Sell" rating, and another rates it with a "Moderate Sell" rating.
Test times for Nvidia's Blackwell chips are significantly longer than for its predecessor, Hopper, due to its dual compute tile architecture. This presents an opportunity for Teradyne to demonstrate its advanced test solutions and potentially secure a larger share of Nvidia's business.
Overall, the outlook for Teradyne remains positive, despite short-term macroeconomic pressures. The company's focus on AI and advanced test solutions positions it well for future growth opportunities in the semiconductor industry.
