BofA’s List Of AI & Semiconductor Stocks That Fund Managers Love & Hate: 16 Stocks On The Manager Radar

8. Teradyne, Inc. (NASDAQ:TER)

Number of Hedge Fund Holders In Q2 2024: 41

Section: Gaining Popularity

Teradyne, Inc. (NASDAQ:TER) is a diversified semiconductor and electronic systems test equipment company. Its products enable chip manufacturers and designers to test their silicon wafers, printed circuit boards, chip packages, and wireless devices. Therefore, while the firm’s package testing products expose it to tailwinds from the AI industry, a broader product portfolio has worked against Teradyne, Inc. (NASDAQ:TER) during the overall slow economic environment of 2024. As a result, the shares are up 20% year-to-date, which is in sharp contrast to mid-July’s year-to-date gain of 55.6%. Teradyne, Inc. (NASDAQ:TER)’s stock dropped by 7% in July after the company guided Q3 midpoint revenue at $710 million which was lower than analyst estimates of $718 million. However, the firm can benefit from robust long-term growth from businesses such as robotics especially due to the growing industry interest in humanoid robots.

During the Q2 2024 earnings call, Teradyne, Inc. (NASDAQ:TER)’s management commented on its robotics business:

“Our highest priority in our Robotics go-to-market transformation is the development of an OEM solutions channel for UR. We have seen that customers purchasing cobot-based solutions from these partners get into production more quickly and have fewer problems than customers that build their own solutions or rely upon an integration partner. There are two aspects to the OEM Channel strategy. The first is signing up new OEM solution partners. In the first half of 2024, we have increased the total number of OEM solutions partners by 8%. Second, we work with these partners to get them to scale, which we define as having an annual revenue run rate above $1 million. Midway through the year we have nearly as many OEM solution partners that have reached that revenue level as we had in all of 2023.

One of our largest revenue OEM partners in the first half of 2024 uses our cobots in an AI based logistics solution. Overall, the OEM solutions channel has shown over 70% growth from the first half of 2023 to the first half of 2024. In the second quarter, the OEM channel represented over 30% of UR’s revenue. Finally, because of the criticality of the processes that our Robotics are being used to automate, we saw an opportunity to build a strong service business. In the first half of 2024 we launched managed service offerings at UR and MiR and are beginning to see customer uptake. On balance, the positive effect of these growth vectors and the challenging demand environment, we are expecting growth towards the low end of this year’s target 10% to 20% range.”