This article first appeared on GuruFocus.
Teradyne (NASDAQ:TER) was downgraded to Neutral from Outperform at Baird with a $420 price target, on valuation and a lack of near-term catalysts. Teradyne shares were down 0.27% premarket.
Analyst Quinn Fredrickson framed it as a tactical call rather than a change of view, saying Teradyne remains well positioned over the medium to longer term. The caution covers the sustainability of AI and hyperscaler capital spending growth, opposition to data centers, and a valuation above longer-term averages.
Teradyne's run this year has been driven by enthusiasm over merchant GPU share gains as customers dual-source, and it shipped initial merchant GPU orders in the second quarter, worth about $50 million of revenue in 2026 and scaling toward roughly $600 million over several years. Baird considers that well understood and already in the price. It identifies silicon photonics and co-packaged optics as the next major catalyst, but puts the timing at 2028 and 2029, and doesn't expect compute to drive material upside in the second half of this year given when its hyperscaler customers ramp their next programs.