Is Wall Street Underestimating This Under-The-Radar AI Stock Pick in Cathie Wood’s Portfolio?

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Cathie Wood’s 11 Biggest AI and Data Center Stock Picks. Teradyne, Inc. (NASDAQ:TER) ranks #4 (see Cathie Wood’s 5 Biggest AI and Data Center Stock Picks).

Cathie Wood’s Stake: $456,077,004 

Teradyne Inc (NASDAQ:TER) is perhaps the most notable AI pick in Cathie Wood’s portfolio. Its bull case is simple: with everyone going hungry for AI chips, there is huge demand for testing these chips before deploying them into critical AI infrastructure like data centers, GPUs, and high-performance computing systems. As AI chips become more complex, testing becomes more important and more valuable per chip. Teradyne Inc (NASDAQ:TER) does not have strong competition. The semiconductor automated test equipment market is dominated by two players: Teradyne and Advantest.

As companies deploy AI chips in critical applications, this hardware would require significantly more testing than traditional chips. For example, high-bandwidth memory (HBM), which is used in nearly every AI accelerator, can require up to 10x more test intensity compared to standard DRAM, effectively expanding Teradyne Inc’s (NASDAQ:TER) revenue opportunity per unit.

For the company, AI demand represents over 60% of revenue and is expected to reach around 70% in the upcoming quarters.

JP Morgan recently upgraded Teradyne Inc (NASDAQ:TER) to Overweight following the stock’s post-earnings decline. The firm said nothing structurally changed in the long-term story.

Carillon Eagle Mid Cap Growth Fund stated the following regarding Teradyne, Inc. (NASDAQ:TER) in its Q1 2026 investor letter:

“Teradyne, Inc. (NASDAQ:TER) designs and manufactures testing equipment for semiconductors. Investors have appreciated its strong position in testing for next-generation memory and application specific integrated circuit (ASIC) testing for AI workloads. Additionally, there is potential for” (Click Here to Read the Letter in Detail)

While we acknowledge the potential of TER as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy. 

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