texas instruments' future uncertain after txn stock drop

2025-07-23 general

Dallas, Wednesday, 23 July 2025.
texas instruments’ stock took an 11% nosedive following a disappointing earnings outlook. this decline occurred despite a robust 16% year-on-year revenue increase in the second quarter, reaching $4.45 billion. the tepid forecast casts a shadow over the broader us chip sector, stirring worries about near-term performance of industry giants like nvidia and tsmc. while texas instruments remains optimistic about long-term prospects, recovery in global chip demand is not expected until 2025-2026. the company anticipates third-quarter revenue to range from $4.45 billion to $4.8 billion.

second quarter performance

Texas Instruments reported second-quarter revenue of $4.45 billion, marking a 16% increase compared to the same period last year [1][4]. The company’s earnings per share (EPS) stood at $1.41 [1][4]. Net income for the quarter reached $1.30 billion, also reflecting a 15% year-over-year increase [4][5]. The analog segment showed significant growth, with revenue climbing 18% to $3.452 billion and yielding an operating profit of $1.325 billion [4]. Embedded processing revenue reached $679 million, generating an operating profit of $85 million [4]. These figures surpassed analysts’ initial expectations, showcasing strong profitability [7].

factors influencing the downturn

CEO Haviv Ilan noted that tariffs and geopolitical factors are disrupting global supply chains [5]. He also pointed to a slow recovery in the automotive industry as a contributing factor [5]. Despite a strong second-quarter performance, Ilan attributed part of this success to the tariff environment, suggesting potential instability [5]. The company anticipates an 11% revenue increase for the third quarter, a deceleration compared to the previous quarter’s growth [1]. This tempered outlook reflects the mixed signals Texas Instruments is observing across its end markets [1].

revised wall street ratings

Following the earnings announcement, several Wall Street firms adjusted their ratings and target prices for Texas Instruments [6]. Evercore ISI lowered its target price from $248 to $236, while maintaining an ‘outperform’ rating [6]. Baird increased its target price from $175 to $220, also maintaining an ‘outperform’ rating [6]. UBS reaffirmed its ‘buy’ rating with a target price of $255 [6]. However, Morgan Stanley maintained a ‘sell’ rating, reducing the target price from $205 to $197 [6]. Barclays also maintained a ‘sell’ rating with a target price of $125 [6].

strategic investments and future prospects

Texas Instruments is actively expanding its chip manufacturing capabilities within the united states, earmarking $60 billion for these initiatives [5]. These investments aim to solidify its industry position. Despite the current market apprehension, the company emphasizes its robust business model and the advantages of its 300mm production [4]. Over the past year, Texas Instruments has channeled $3.9 billion into research and development and selling, general, and administrative expenses, along with $4.9 billion in capital expenditures, while returning $6.7 billion to its shareholders [4].

Bronnen

semiconductor earnings