By Al Root

Teradyne's performance on Wednesday is a reminder that the stock market is fickle and that calling a reaction to any company's earnings report is little better than a coin flip.

Shares of Teradyne, which makes test equipment for semiconductors, were down more than 16% in midday trading on Wednesday at $319.06, while the S&P 500 and Dow Jones Industrial Average were down 0.3% and 0.6%, respectively.

Teradyne is on pace for its third consecutive decline. Shares started the week above $418.

An investor would think the company said something terrible. Not so. On Tuesday evening, Teradyne reported first-quarter earnings per share of $2.56 from sales of $1.3 billion. That's up from 75 cents and $686 million a year ago.

Impressive growth, and numbers topped Wall Street's expectations. Analysts projected EPS of $2.11 and sales of $1.2 billion.

Guidance wasn't an issue. Teradyne's outlook for the second quarter is for earnings per share of about $2 from sales of $1.2 billion. Both numbers were a touch above the Street, according to Bloomberg.

"Teradyne delivered strong 1Q26 results...exceeding both guidance and expectations, driven by broad-based AI demand across compute, networking, memory, power, System-Level Test, and emerging areas like photonics and board test, with AI-related applications now representing about 70% of revenue," wrote Susquehanna analyst Mehdi Hosseini in a Wednesday note.

Teradyne received its first test order from a GPU maker in the first quarter.

Nothing seems wrong. Investors, however, are nervous after OpenAI reportedly missed revenue targets, casting doubt on the strength of the AI revolution.

"The [Teradyne] outlook reflects continued strength across AI compute, networking, and memory, offset by normalization from peak 1Q margins and ongoing management caution around second-half timing and demand lumpiness," added Hosseini.

Normalization and second-half timing, mixed with some existing fears, is all it took to send a hot stock plunging.

Hosseini sees it as an opportunity. He rates shares Buy and has a $415 price target. Overall, 65% of analysts covering the company rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 ranges from about 55% to 60%. The average analyst price target for the share is about $354.

If they get to the average or Hosseini's target is anyone's guess, but investors can watch trading in Teradyne stock to gauge a change in recent AI fears.

Write to Al Root at allen.root@dowjones.com

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April 29, 2026 14:21 ET (18:21 GMT)

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