Teradyne (TER)

The market is focusing on the headline‑making AI revenue surge, but the real story is the **inventory build‑up and test‑cell capacity constraints** that will dictate whether the AI tailwind translates into sustained earnings. While revenue topped $1.3 B, margins are eroding and EPS fell because the 12‑16‑week lead time and the 9‑12‑month dual‑vendor qualification cycle are now the bottlenecks. Management’s quote - “Dual vendor qualification generally runs through four phases… it takes nine to 12 months from start to ramp” - is the operative constraint. **My view shifts if inventory turns over slower than 60 days or if the book‑to‑bill ratio falls below 2**; both would signal that the AI growth is stalling.