Chip Testing Proficiency Gives Teradyne a Wide Moat and Makes It One of Our Top Picks

Teradyne is one of our top picks in technology. We think our $172 fair value estimate for the shares offers material upside to long-term investors in a wide-moat-rated firm with strong growth opportunities in semiconductor testing and industrial automation. The shares look increasingly attractive to us following a significant sell-off in response to the company's first-quarter guidance, which we view as a nearsighted market overreaction. Teradyne expects 2022 semiconductor testing sales to be hampered by a delayed ramp-up at TSMC for its 3-nanometer node, which we expect to produce chips for the Apple iPhone along with notebooks and server CPUs. But we view this as delayed, not destroyed, demand and expect all the lost sales to be recouped in 2023 and 2024.