Why Teradata Stock Jumped More Than 40% This Morning
Key Points
Teradata's Q4 earnings beat analyst estimates by 37%, sending shares to a 52-week high.
CEO Steve McMillan credits agentic AI tools for helping customers get more from their data.
Even after the big jump, Teradata trades at less than 12 times free cash flow.
Teradata (NYSE: TDC) investors are having a great day on Wednesday, Feb. 11. Following a fantastic earnings report, the data warehousing and business analytics veteran's stock jumped as much as 42.8% in the early action. The skyrocketing gain cooled down to 22% as of noon ET, but the stock is still at a fresh 52-week high.
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Teradata's Q4 by the numbers
Teradata's Q4 2025 sales rose 3% year over year, landing at $421 million. The analyst consensus called for approximately $400 million.
On the bottom line, adjusted earnings increased by 40% to $0.74 per share. Here, your average analyst would have settled for $0.54 per share.
And Teradata showed improving earnings quality. Recurring revenues grew faster than total sales, led by a 15% year-over-year uptick in annual recurring revenues (ARR) from the public cloud segment. The quarter's free cash flow increased from $148 million to $151 million, far ahead of $71 million in adjusted net income.
This stock still looks cheap
As expected, artificial intelligence (AI) played a large role in Teradata's success. Agentic AI tools are helping customers organize and access their business data, and CEO Steve McMillan sees significant business value in this approach.
"We believe that enterprises of the future will be shaped by those who harness agentic AI systems that reason, act, and adapt autonomously 24/7," McMillan said on the earnings call. "Teradata is uniquely suited to provide all of this with our autonomous AI and knowledge platform."
On top of the AI opportunity, Teradata's stock remains modestly valued even after today's gigantic jump. The shares are changing hands at less than 12 times free cash flow and roughly 2x sales today. That's a bargain next to many market darlings in the data management and analytics sector.
Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Teradata. The Motley Fool has a disclosure policy.