Key Stats for Teradata Stock
- Past-Week Performance: -5.7%
- 52-Week Range: $18.4 to $41.8
- Current Price: $25.3
What Happened?
Teradata (TDC), the enterprise data and AI analytics platform serving some of the world’s largest banks, airlines, and telecoms, closed its most consequential transformation year in a decade after total annual recurring revenue (ARR), the forward-looking subscription metric that anchors its valuation, returned to positive growth of 3% in 2025, reaching $1.52 billion, while the stock trades at $25.31 against a 52-week high of $41.78, leaving a gap the company’s accelerating fundamentals are now beginning to close.
Q4 2025 results, reported February 10, delivered the sharpest evidence of that turn: total revenue of $421 million beat the IBES consensus of $400.8 million by 5%, adjusted EPS of $0.74 crushed the $0.56 estimate by 32%, and free cash flow of $151 million in the quarter alone pushed the full-year total to $285 million, above the high end of guidance.
Public Cloud ARR, the portion of recurring revenue generated from cloud-hosted deployments of Teradata’s platform, grew 15% to $701 million and now represents 46% of total ARR, while the cloud net expansion rate, a measure of how much existing cloud customers are spending relative to a year ago, held at 108%, meaning the installed base is growing faster than it churns.
Adding significant non-operating firepower to the story, Teradata on February 19 reached a settlement agreement with SAP to resolve all outstanding litigation, under which it expects to receive a gross payment of $480 million, netting approximately $355 to $362 million after fees and before taxes, a cash infusion that CFO John Ederer said at the March 3 Morgan Stanley TMT Conference would be evaluated against the company’s $450 million term loan maturing June 2027, ongoing buybacks under a freshly reauthorized $500 million repurchase program, and potential M&A.
Chief Executive Stephen McMillan stated on the Q4 2025 earnings call that “we are solidly positioned to continue on our profitable growth path in 2026, with healthy free cash flow generation to deliver value to our shareholders,” anchoring guidance for $310 to $330 million in 2026 free cash flow, 2% to 4% total ARR growth, and approximately 100 basis points of additional operating margin expansion on top of the 500 basis points already delivered over the prior three years.
Teradata’s competitive positioning over the next three to five years rests on three converging developments: the mid-2026 GA launch of a GPU-enabled on-premises hardware platform embedding NVIDIA’s AI software stack, the commercial ramp of AI Studio (a unified platform for building, deploying, and governing AI agents directly alongside enterprise data), and the deployment of over 150 proof-of-concept AI engagements from 2025 that management expects to convert into production ARR, all while the $480 million SAP settlement provides the balance sheet optionality to accelerate every one of those initiatives.
Wall Street’s Take on TDC Stock
The $285 million in 2025 free cash flow, a metric measuring how much cash a business generates after covering operating expenses and capital spending, confirms that Teradata’s cost restructuring is now showing up where it matters most, directly translating Q4’s operating margin expansion of 22.8% into durable shareholder returns.
TIKR’s forward estimates show normalized EPS rising from $2.58 in 2025 to $2.63 in 2026 and $2.81 in 2027, supported by the same operational discipline that drove 500 basis points of non-GAAP operating margin expansion over the prior three years and management’s guidance for another 100 basis points in 2026.
Eleven analysts currently cover TDC, with 2 buys, 2 outperforms, 4 holds, 2 underperforms, and 1 sell; the mean price target of $35.73 implies 41.2% upside from the March 27 close of $25.31, suggesting the Street is collectively underweighting the operational recovery already in the numbers.
The target range runs from $22 on the low end, reflecting execution risk around the GPU hardware platform launch and AI Services ARR conversion, to $49 on the high end, where the SAP settlement proceeds accelerate debt reduction or buybacks at a pace the base case does not assume.
What Does the Valuation Model Say?
TIKR’s mid-case model, which assumes a revenue CAGR of just 1.1% through 2030 and net income margins expanding from 15% in 2025 to 16.6% at mid-case, still yields a target price of $33.39, an implied total return of 31.9%, because the real value creation engine is FCF margin expanding from 17.1% today to 19.3% in 2026 and 32.1% by 2030, driven by the consulting services turnaround and operating leverage on a stabilizing ARR base.
The market is treating TDC as a declining revenue business, but TIKR’s model reaches $33.39 on just 1.1% revenue CAGR because FCF margins more than double by 2030.
Those FCF margins are already moving: free cash flow grew from $277M in 2024 to $285M in 2025, with TIKR estimating $320M at the 2026 midpoint, validating the $33.39 target.
Management’s commitment to deploying 50% of free cash flow toward buybacks under the reauthorized $500M repurchase program signals this is capital discipline, not narrative.
The primary risk is that cloud ARR net expansion, which measures revenue growth from existing cloud customers and currently sits at 108%, decelerates if AI workload conversions stall, compressing the recurring revenue growth that underpins every FCF margin assumption in the model.
The Q1 2026 recurring revenue print, due in May, is the first live test of management’s 6% to 8% growth guidance and will confirm whether the 150 AI proof-of-concepts from 2025 are converting into billable ARR at the pace the model requires.
Should You Invest in Teradata Corporation?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up TDC stock and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track Teradata Corporation alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Access Professional Tools to Analyze TDC stock on TIKR for Free →
