The Zhitong Finance App learned that although the third-quarter revenue guidance issued by Texas Instruments (TXN.US), the world's largest analog chip and embedded processor manufacturer, exceeded market expectations, it failed to ignite investor enthusiasm — the company's stock price has risen sharply this year, and market expectations have soared.
According to Wednesday's announcement, Texas Instruments second-quarter revenue increased 23% year-on-year to US$5.46 billion, better than market expectations of US$5.24 billion; earnings per share were US$2.14, which also exceeded market expectations.
The company expects revenue for the third quarter to be between US$5.65 billion and US$6.15 billion, while according to market compilation data, the average estimate of analysts is US$5.62 billion. This outlook shows that the company is becoming one of the main beneficiaries of the wave of artificial intelligence spending; at the same time, the recovery in demand for chips in the company's traditional basic automotive and industrial equipment sectors is also adding color to the performance.
CEO Haviv Ilan (Haviv Ilan) said in a statement that revenue growth was “broad-based, particularly led by the industrial, data center, and automotive sectors.”
However, after a cumulative increase of about 70% in stock prices during the year, the market's expectations for the company are already high. After the financial report was announced, the stock price of Texas Instruments fell by about 4% during the after-hours trading session.
The company expects earnings per share for the current quarter to be between $2.23 and $2.57, higher than analysts' average expectations of $2.15.
As the first major US semiconductor company to release performance forecasts in this financial reporting season, Texas Instruments provides an important reference for investors to calibrate expectations. The company has the broadest product portfolio and customer base in the industry, and has made significant progress in the field of AI data centers. Its chips support high-end components from companies such as Nvidia (NVDA.US).
The company pointed out that the automotive sector has become a performance highlight. Previously, automotive customers had been digesting in-stock chips, but now they have resumed purchasing parts.
After several years of significant capital expenditure to build a new factory, the company is returning to a relatively low level of expenditure. This modernization of the production line is expected to help Texas Instruments reduce manufacturing costs and improve profitability. Management believes this will give the company more flexibility compared to competitors that rely on outsourced production. Now that the peak of investment has passed, the company promises to return more cash flow to shareholders — a tradition that has always been the case.
Chief Financial Officer Rafael Lizardi (Rafael Lizardi) said that the company still maintains its 2026 capital expenditure budget of 2 billion to 3 billion US dollars, which is far below the average annual level of 4.8 billion US dollars over the past three years. He pointed out that if current demand continues to rise — and overall revenue still hasn't hit the peak of the previous period — Texas Instruments has a unique production capacity advantage and can quickly configure factory space to accept orders, which is not the same as before.
“This is a world of difference,” Lizzardi said. “We can handle any foreseeable market demand.”
Analog chips and embedded processors convert real-world signals into electronic signals and are widely used in various devices with switching functions. The company derives most of its revenue from industrial machinery and automotive components, but its technology is also used in data center equipment, such as regulating critical functions such as powering high-end processors.
The company's CEO, Havif Elan, said in a statement: “The cash flow from operating activities reached US$8.7 billion over the past 12 months, once again demonstrating the strength of our business model, the high quality of our product portfolio, and the advantages of 300 mm wafer production. Free cash flow for the same period was $6.5 billion. Over the past year, we have invested US$3.9 billion in R&D and sales management expenses, US$3.3 billion in capital expenditure, and returned US$5.8 billion to shareholders.”
Ian Bezek, head of the investment research institute Ian's Inside Corner, believes that overall financial reports are strong, and free cash flow in particular has increased sharply by 55% over the same period last year. In an email, he commented, “Texas Instruments accurately grasped the capital expenditure cycle, expanded production capacity in a timely manner before demand for analog chips surged, and is now reaping dividends. The guidance for the third quarter was moderately higher than market consensus, and demand for analog chips continues to accumulate. However, since market expectations were already high, despite solid data, there may be limited room for stock price growth in the short term.”