Slight Revenue Gain but Profit Under Pressure — Weak Guidance Sends Texas Instruments Down Over 8% After Hours

TradingKey - U.S. analog chip leader Texas Instruments (TXN.US), often dubbed the "King of Analog," released its latest earnings report, and weak forward guidance from management dented investor confidence. On Wednesday, shares plunged nearly 8.6% in pre-market trading, and fell over 8% after hours following the results.

[Source: Google Finance]

The company forecasted Q4 revenue of $4.22 billion to $4.58 billion, below the Wall Street consensus of $4.5 billion. Its midpoint EPS outlook of $1.26 also missed analysts’ expectations of $1.39. The disappointing outlook sparked concerns about a slowdown in the semiconductor recovery cycle.

In the third quarter, TI reported revenue of $4.74 billion, up 14% year-over-year and slightly above estimates. However, earnings per share of $1.48 came in below consensus. The company attributed the profit shortfall to heavy investments in R&D and capacity expansion over the past year — strategic moves aimed at strengthening long-term resilience, but which continue to pressure margins in the near term.

CEO Haviv Ilan noted during the earnings call that while the broader semiconductor market is still recovering, the pace is “slower than in previous cycles.” He highlighted growing conservatism among industrial customers in their expansion plans, reflecting how trade tensions and macroeconomic uncertainty are dampening downstream demand.

TI generates about 20% of its revenue from China, where tariff policy risks and accelerating local substitution have left some customers cautious in ordering, still navigating inventory drawdowns.

Ilan also signaled that capital expenditures next year could fall to between $2 billion and $3 billion, down from recent levels, in an effort to ease cash flow pressure.

Widely regarded as a "barometer of the global semiconductor industry," Texas Instruments serves a vast customer base across automotive, industrial, and consumer electronics. Its performance is closely watched as a leading indicator of global manufacturing and auto-electronics demand. The current weakness suggests that demand for automotive and industrial chips has not yet fully rebounded.

Before the earnings release, Barclays maintained a “Underweight” rating on the stock, warning that the sector may face not just cyclical headwinds, but potential structural contraction.

Market analysts say TI’s cautious outlook casts a shadow over the upcoming chip earnings season. With major players like AMD, Intel, and NVIDIA set to report soon, investor sentiment may turn increasingly cautious.