Nvidia test slot could send this stock soaring, UBS says
Investing.com — A potential breakthrough in securing a test slot at Nvidia (NASDAQ:NVDA) could become a major catalyst for Teradyne (NASDAQ:TER) shares, UBS analysts said, estimating that even a modest win may drive hundreds of millions of dollars in annual revenue.
In a Sunday note, the analysts said they have received “a host of investor questions” about the potential size of the opportunity for Teradyne if it becomes a second-source test supplier for Nvidia GPUs.
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While a definitive win has not been confirmed, UBS believes Nvidia is “systematically dual-sourcing throughout its supply chain – meaning the winds of change may be blowing in TER’s direction.”
UBS estimates that Nvidia’s test tool purchases via Advantest for its current Blackwell GPU ramp could reach $1.75 billion in 2025, based on assumptions that OSAT partner KYEC is buying around 700 testers at $2.5 million apiece.
That would make Nvidia a roughly 30% end customer for Advantest in 2025. If Teradyne can capture even a small share of that, the impact would be substantial.
“If TER was to make inroads at NVDA as a second source and conservatively win even just ~10% of their business, this could potentially translate to several $100MMs of revenue per year – a material upside driver for the company,” analysts led by Timothy Arcuri said.
They also point out that Blackwell test times are significantly longer than its predecessor Hopper, due to the more complex packaging involving two compute tiles. That adds further weight to the potential revenue contribution from any incremental test wins.
While much of the investor focus on Teradyne still centers on Apple (NASDAQ:AAPL), UBS believes the market is beginning to recognize “a broader set of catalysts,” including the Nvidia opportunity, Amazon’s adoption of Teradyne’s collaborative robots, and increasing transistor intensity in smartphones as the industry transitions to more advanced nodes.
UBS rates Teradyne shares Buy.
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