Teradyne shares jump 11% as Jefferies sees $2 billion Nvidia opportunity

Teradyne shares jumped 11% to $271.70 in Wednesday trading after Jefferies initiated coverage of the semiconductor test equipment manufacturer with a Buy rating and a $284 price target, according to Barron's. The bullish call offered welcome relief to a stock that has been battered over the past few months.

AI-driven revenue accounted for over 60% of the company's revenue in the third quarter of 2026, which ended Sept. 27. Modern AI chips are built with several miniature components bundled together into one package, and a single hidden defect can ruin the expensive finished product.

That forces chip makers to test each component more thoroughly, driving massive demand for Teradyne equipment. Jefferies said Teradyne's relationship with Nvidia as a second-source supplier could represent another tailwind as major chip makers diversify away from relying on a single test supplier.

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The firm thinks Teradyne's business with Nvidia could expand from generating $50 million in 2026 to over $2 billion by late 2029, capturing around 30% of Nvidia's test equipment spend. Jefferies also forecasts Teradyne will generate total revenue of $6.7 billion in 2027 and $8.5 billion in 2028, outpacing Wall Street estimates of $6.5 billion and $8 billion, respectively. Shares have risen about 27% this year as of the closing bell Tuesday.