Teradyne Inc. fell 3.9% in morning trading to an intraday low of $365.01 after Baird downgraded the semiconductor test equipment maker to Neutral from Outperform, citing stretched valuation.
The downgrade reflects concerns that the stock’s recent gains have priced in much of the near-term upside from its merchant GPU testing business, which generated roughly $50 million in expected 2026 revenue from initial GPU orders shipped in the second quarter. Baird projects this revenue could scale to about $600 million over several years, but notes that compute-related demand is unlikely to provide material upside in the second half of 2026 given hyperscaler ramp schedules.
Broader risks include sustainability of AI and hyperscaler capital expenditure growth, regulatory headwinds such as data center opposition, and a share price that has run well above historical averages. While Baird acknowledges potential future growth drivers in silicon photonics and co-packaged optics, it views these as materializing only in 2028 and 2029—timelines too distant to justify current valuations.
The decline was largely company-specific, as major U.S. equity indexes—S&P 500, Dow Jones, and Nasdaq—traded higher. Peers in the semiconductor test equipment sector also pulled back amid profit-taking following a multi-month rally tied to enthusiasm around AI infrastructure spending.
Baird maintained a price target of $420, down from a prior 52-week high of $487.91, signaling limited near-term upside despite the stock’s recent strength.
