Key Stats for Texas Instruments Stock
- Price Change for $TXN stock: -5.6%
- Current Share Price: $171
- 52-Week High: $222
- $TXN Stock Price Target: $195
What Happened?
Texas Instruments (TXN) stock dropped more than 5% on Thursday despite the analog chip maker reporting third-quarter results that beat revenue expectations. The market’s adverse reaction stemmed from weak guidance and margin pressure, overshadowing the solid top-line performance.
Texas Instruments reported revenue of $4.74 billion, topping analyst estimates of $4.64 billion and representing 14.2% year-over-year growth. Moreover, earnings per share of $1.57 exceeded estimates of $1.49, and adjusted EBITDA of $2.18 billion missed estimates of $2.27 billion by nearly 5%.
TXN stock got hammered because the company expects fourth-quarter revenue of $4.4 billion at the midpoint, well below analyst estimates of $4.52 billion. Guidance for earnings per share came in at $1.26, missing estimates by more than 10%.
Operating margin compressed to 35.1% from 37.4% in the year-ago quarter, indicating the company is facing significant cost pressures.
Inventory days outstanding improved to 218 from 234 in the previous quarter, indicating the chip maker is managing inventory more effectively.
See analysts’ growth forecasts and price targets for TXN stock (It’s free!) >>>
What the Market Is Telling Us About TXN Stock
The market’s reaction to TXN stock reflects investor concern that the semiconductor recovery is slowing down just as it was gaining momentum.
CEO Haviv Ilan acknowledged the awkward position, saying “analog revenue grew 16% year over year, and embedded processing grew 9%,” but adding that the recovery is “continuing, though at a slower pace than prior upturns.”
Management attributed the third-quarter growth to ongoing recovery across most segments, with strong performance in industrial, automotive, and data center-related enterprise systems.
But the industrial market, which delivered about 25% year-over-year growth, saw only low single-digit sequential gains after a strong second quarter.
Ilan explained that customers are in a “wait and see mode” with ongoing uncertainty around macroeconomic trends, tariffs, and capital investments.
The company is responding by moderating factory loadings and closely managing inventory, but that approach limits near-term upside.
TXN stock received positive news from its data center and enterprise systems segment, which saw a surge of approximately 35% year-over-year and 20% sequentially.
Ilan identified the data center as the fastest-growing market, running at a $1.2 billion annualized rate, and announced plans to break out this segment in future reporting.
Automotive revenues increased by high single digits both sequentially and year-over-year, with growth described as consistent across all regions. Management attributed this to content growth and stable demand, showing that at least one primary end market remains resilient even as others struggle.
Texas Instruments is undergoing operational restructuring, including the closure of its last 250-millimeter fabrication plants and the consolidation of some R&D sites.
These moves are aimed at long-term efficiency and should gradually reduce expenses and support future gross margin improvement. However, restructuring costs will negatively impact results in the near term, which doesn’t help TXN stock right now.
The company emphasized that inventory levels are now optimized to meet customer needs without requiring additional build-up.
This allows Texas Instruments to maintain short lead times and high service levels even as factory loadings align with weaker demand.
Looking ahead, TXN stock faces a tricky environment. The industrial segment, which represents a massive chunk of the business, is seeing customers reach normalized inventory levels and showing increased hesitancy around new investments. That reflects broader macroeconomic caution that won’t disappear quickly.
Management expects the data center to be the main growth driver going forward, with over 50% year-to-date growth in this segment.
Texas Instruments plans to prioritize investments in data center products, which makes sense given the AI boom and growing demand for computing infrastructure.
The key things to watch in the coming quarters are the pace of demand recovery in industrial and automotive markets, the continued expansion of the data center business, and whether cost savings from operational restructuring actually materialize.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
