Teradyne vs. KLAC: Which AI Infrastructure Stock Is the Better Buy?

Teradyne TER and KLA Corporation KLAC are major players in the AI Infrastructure market. While Teradyne focuses on automated test equipment essential for validating high-performance AI chips, KLA provides advanced process control and inspection solutions that enable manufacturers to produce increasingly complex semiconductors used in AI data centers and applications.

Per an IDC report, global AI infrastructure spending reached a record $318 billion in 2025, more than doubling year over year, and is projected to exceed $1 trillion by 2029. According to Gartner, in 2026, the worldwide AI spending is expected to reach $2.59 trillion, representing 47% year-over-year growth. This rapid growth is expected to have been driven primarily by technology vendors and hyperscale cloud providers that are expanding AI infrastructure to meet rising demand for generative AI and agentic AI applications. Both Teradyne and KLA are expected to benefit from this rapid growth pace.

So, TER or KLAC — Which of these AI Infrastructure stocks has the greater upside potential? Let’s find out.

The Case for TER Stock

Teradyne is benefiting from the growing demand for AI infrastructure, which is driving robust growth across its semiconductor test and robotics divisions. In the first quarter of 2026, the Semiconductor Test (SemiTest) segment alone generated $1.1 billion in revenues, breaking the $1 billion threshold for the first time and more than doubling year over year. This segment saw a 26% sequential increase and more than a 100% year-over-year increase.

Growth is largely attributed to the accelerating demand for AI and data center technologies, with AI-related demand accounting for nearly 70% of Teradyne’s revenues in the first quarter of 2026, up from about 60% in the previous quarter. 

The company’s product innovation is supporting its growth. Teradyne’s introductions, such as the Photon 100 platform for silicon photonics and co-packaged optics testing and the Omnyx production board test platform, address critical needs in AI data center build-outs. The Photon 100 is expected to contribute to a TAM expansion opportunity that could reach $300 million to $700 million per year over the midterm.

The Case for KLAC Stock

KLA continues to benefit from AI-driven spending in leading-edge foundry/logic, high-bandwidth memory and advanced packaging, supporting market share gains in process control and steady services growth that anchors cash generation.

A key factor behind KLAC’s success is its leadership in process control for advanced wafer-level packaging. In 2025, KLAC achieved the #1 position in this segment, and its process control product portfolio revenues for advanced packaging are expected to grow from approximately $635 million in 2025 to about $1 billion in 2026. This reflects accelerating customer adoption as AI drives demand for more complex packaging and integration.

KLAC’s management is confident about ongoing growth. They noted strong demand from customers and a solid sales funnel. The company expects the wafer equipment market to surpass $140 billion in 2026, with even greater growth anticipated for 2027. KLAC’s role is increasing in all areas of semiconductor manufacturing. Process control needs are growing due to the complexity of AI chips and advanced packaging.

Price Performance and Valuation of TER and KLAC

In the trailing 12-month period, shares of Teradyne and KLAC have appreciated 277.6% and 151.1%, respectively. The outperformance in Teradyne stock can be attributed to strong AI-related demand, which is driving significant investments in cloud AI build-out as customers accelerate production of a wide range of AI accelerators, networking, memory and power devices. 

Despite KLAC’s dominant process control market share, strong AI infrastructure investment and strong momentum in advanced packaging, the company’s prospects suffer from export control and tariff uncertainty, customer concentration and gross margin sensitivity to elevated DRAM-related system costs expected to persist through at least 2026.

TER and KLAC Stock Performance

Image Source: Zacks Investment Research

Valuation-wise, Teradyne and KLA shares are currently overvalued, as suggested by a Value Score of D and F, respectively.

In terms of forward 12-month Price/Sales, TER shares are trading at 11.24X, lower than KLA’s 17.47X.

TER and KLAC Valuation

Image Source: Zacks Investment Research

How Do Earnings Estimates Compare for TER & KLAC?

The Zacks Consensus Estimate for TER’s 2026 earnings is pegged at $7.20 per share, which has increased 1.55% over the past 30 days. This indicates an 81.82% increase year over year.

Teradyne, Inc. Price and Consensus

Teradyne, Inc. price-consensus-chart | Teradyne, Inc. Quote

However, the Zacks’ Consensus Estimate for KLAC’s fiscal 2026 earnings is pegged at $3.71 per share, which has been unchanged over the past 30 days. This indicates a 11.41% increase year over year.

KLA Corporation Price and Consensus

KLA Corporation price-consensus-chart | KLA Corporation Quote

Teradyne’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average surprise of 17.05%. KLAC’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average surprise of 3.99%. The average surprise of Teradyne is higher than that of KLA.

Conclusion

While both Teradyne and KLA stand to benefit from the booming AI Infrastructure market, Teradyne offers a greater upside potential due to its robust, diversified portfolio, which meets the rising demand for AI-driven technologies and stronger earnings momentum.

While KLAC remains a high-quality AI infrastructure company, its ongoing geopolitical and margin headwinds may temper returns in the near term.

Currently, Teradyne carries a Zacks Rank #2 (Buy), making the stock a stronger pick than KLA, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy)  stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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