Shares of NXP Semiconductors surged as much as 25% on Wednesday following the company's announcement of second-quarter revenue and profit guidance that surpassed Wall Street expectations. The Dutch chipmaker reported first-quarter revenue of $3.18 billion, an increase of 12% year-over-year, driven by strong performance in its automotive and industrial segments.
The automotive segment, which represents the largest portion of NXP's sales, grew 6% to $1.78 billion, while industrial and Internet of Things revenue jumped 24% to $628 million. The company's communications infrastructure and other categories rose 21% to $380 million, and mobile revenue increased 16% due to higher secure transaction demand.
For the second quarter, NXP guided revenue between $3.35 billion and $3.55 billion, with adjusted earnings per share expected to range from $3.29 to $3.72. This outlook came as a relief to investors who had been concerned about the prolonged inventory correction in the automotive and industrial chip markets.
CEO Rafael Sotomayor expressed optimism about the company's trajectory, stating that the momentum built in the first quarter is expected to accelerate through the remainder of 2026. He highlighted the shift toward software-defined vehicles as a key driver, where increased chip content per vehicle is fueling growth beyond simple unit production numbers.
NXP also provided a new angle for investors by emphasizing its data-center business. Management projected data-center-related revenue of approximately $200 million for 2025, with expectations to exceed $500 million by 2026. The focus is on control plane chips for cooling, power, board management, and secure controls, rather than GPUs or AI accelerators.
The positive outlook aligns with broader trends in the semiconductor industry. Texas Instruments recently issued a robust outlook driven by orders from data centers and industrial customers. Analysts at TD Cowen noted signs of a pickup across industrial segments and said auto demand is holding up better than expected, with the company's revenue engine finally reigniting.
Despite the strong performance, risks remain. Car production, particularly in China, remains uneven, and NXP has flagged ongoing input-cost pressures, leading to targeted minor price hikes. The company described the impact of these price adjustments as immaterial for the second quarter.
NXP's shares were trading at $288.07 by late morning on the Nasdaq, reflecting the sharp gains. The stock's intraday move was the steepest since the company went public in 2010, underscoring the market's positive reception of the earnings beat and guidance.
