Teradyne Down 84.9% From Its High as Chip Stocks Face Dated Tests

Teradyne trades 84.9% below its 52-week high of $487.91, and 14 of the 30 members of the Philadelphia Semiconductor Index are down more than 50%, according to a panelist on the November 9 episode of CNBC's Fast Money. Microchip Technology and STMicroelectronics have each fallen more than 70% from their highs. Skyworks Solutions is the outlier: at $90.03, it sits just 3.6% below its 52-week high. Each of the three damaged stocks has a dated event that will confirm or destroy its recovery case.

Why did Microchip fall after beating estimates?

Microchip trades at $62.08, down 15.9% over the past month. The September quarter beat: non-GAAP EPS of $0.97 against a $0.94 consensus, with revenue up 42.2% year over year. The outlook did the damage. December-quarter guidance of $1.573 billion to $1.638 billion implies a midpoint down 1% sequentially, and gross margin is guided to 64.0% to 65.0%, down from 66.5%. About $53 million of September revenue came from one-time items booked at 100% gross margin. None of it repeats.

The supply side matters more. CEO Steve Sanghi said on the November 5 call that "demand is stronger than the capacity available" and that "AI has been crowding out capacity for trailing edge nodes." Lead times run six to 32 weeks, and orders placed inside those windows go unfilled.

The March-quarter guidance, due with the next report, is the test. Sanghi said the backlog for the March quarter is "much better than December quarter was at the same point in time," and book-to-bill remains well above one. PCIe Gen 6 switch and retimer design wins reached 24, up from 12 at the end of the June quarter. Microchip closed its Hailo acquisition in edge AI on September 17 and its Vorago radiation-hardened chips purchase on October 8. The stock trades at 16 times forward earnings against a consensus target of $86.48. The case breaks if March guidance declines again, if supplier price increases starting in January push gross margin below the December range, or if Hailo's losses and R&D costs overwhelm its revenue. Sanghi told investors to "think of 65% as a long-term gross margin," so revenue must carry the recovery.

Can Teradyne hold its rebound?

Teradyne trades at $263.75, down 31.3% over the past month. Third-quarter non-GAAP EPS of $2.29 beat the $2.05 consensus, and revenue rose 69.8%. Shares still fell about 6.6% after the report. Fourth-quarter guidance of $1.25 billion to $1.35 billion in revenue suggested growth is leveling off after a year of roughly $5.2 billion in revenue, up over 60%.

CEO Greg Smith said on the October 28 call that the first hyperscaler adding Teradyne as a second test supplier expects its next major ramp in mid-2027. A second hyperscaler has passed qualification, with capacity purchases expected in the second half of 2027. A third is in qualification. Teradyne says test equipment's share of semiconductor capital spending rose from 6.4% in 2025 to 8.1% in the first eight months of 2026. Applied Materials reported fiscal fourth-quarter revenue of $10.41 billion on November 12, up 53.1%, and guided fiscal first-quarter revenue to $11.10 billion plus or minus $500 million.

CFO Michelle Turner said: "Where we sit today, we expect each quarter next year to grow compared to 2026." The stock trades at 20 times forward earnings against a $415.88 consensus target and has already gained 24.0% in the past week. Risks: a ramp slipping past mid-2027, memory test orders pulled forward, or tighter U.S. export controls on equipment sales to China.

What fixes STMicroelectronics' margins?

STMicroelectronics trades at $46.46, still up 78.3% year to date from $25.79. First-half 2026 showed a net loss of $171 million, driven by a $419 million unrealized charge on a convertible bond derivative. Third-quarter non-GAAP EPS of $0.37 missed the $0.41 estimate. Gross margin of 37.3% carried about 60 basis points of unused-capacity charges.

A restructuring will close four older fabs and move output to 300mm and 200mm sites. CFO Lorenzo Grandi still expects "more than 400 basis points of structural gross margin improvement," arriving "as a step function either toward the end of 2027 or in early 2028." Fourth-quarter revenue is guided to $4.15 billion with gross margin near 39%. The backlog exceeds $20 billion. Data center revenue should reach about $1.3 billion in 2026 and well above $2 billion in 2027.

Shares trade at 18 times forward earnings against a $70.96 consensus target. Customers must approve fab transfers at three plants. Qualification delays past early 2028, worsening Power & Discrete losses, an S&P downgrade from BBB+/negative, or the $750 million cash-plus-shares convertible settlement would each damage the case.

Of the three, Microchip has the clearest path: its shortfall is supply, and backlog already sits in the March quarter. Teradyne waits for 2027 ramps. STMicroelectronics waits longest, on fab closures its own CFO does not expect before the end of 2027.