Texas Instruments (TXN) saw its shares surge approximately 16% in early trading Thursday after the analog chipmaker delivered first-quarter earnings that surpassed Wall Street expectations and issued a second-quarter forecast that also topped analyst projections.
Strong Quarterly Performance
For the first quarter ended March 31, Texas Instruments reported revenue of $4.83 billion, a 19% increase year-over-year, with earnings per share of $1.68. The company's industrial segment posted a revenue jump of over 30%, while data-center revenue surged roughly 90% compared to the same period last year. Automotive revenue grew mid-single digits, and communications equipment revenue rose about 25%.
Optimistic Second-Quarter Guidance
Management guided for second-quarter revenue in the range of $5.0 billion to $5.4 billion, with earnings per share between $1.77 and $2.05. Both figures comfortably exceeded the LSEG consensus estimates of $4.86 billion in revenue and $1.57 in earnings per share. CEO Haviv Ilan attributed the stronger-than-expected sales to “continued acceleration” in demand from industrial and data-center customers.
Industrial and Data-Center Demand Driving Growth
During the earnings call, Ilan highlighted “five or six months of continued growth” in industrial demand. Industrial sales climbed over 20% sequentially and more than 30% from last year. Data-center revenue also showed strong sequential growth of over 25% and nearly doubled year-over-year. While automotive revenue was flat sequentially, it increased mid-single digits from the prior year. Communications equipment revenue jumped roughly 25% year-over-year, while personal electronics saw no significant change.
Cash Flow and Capital Expenditure
Texas Instruments reported trailing 12-month free cash flow of $4.35 billion, a sharp increase from $1.72 billion a year ago. This figure includes $555 million received from the U.S. CHIPS Act, which is tied to the construction of its new 300-millimeter wafer fabrication plant in Sherman, Texas. Quarterly capital expenditure dropped to $676 million. Management noted that free cash flow improved as growth resumed and capital spending began to moderate.
Cautious Outlook and Sector Implications
Despite the positive results, Ilan cautioned against interpreting the strong start as a full cycle recovery, recalling a “false start” in the second half of 2025. He noted that automotive demand in China slipped during the first quarter and that pricing remained stable without broad increases. Industrial revenue remains roughly 15% below its 2022 peak, suggesting room for further recovery if order momentum continues. The company stated that inventories and factory capacity are sufficient to maintain short lead times.
The strong results from Texas Instruments, an early reporter among major chipmakers, lifted shares of other semiconductor companies. NXP Semiconductors, Analog Devices, and ON Semiconductor each gained between 3.5% and 4.5% in early trading. The company's broad exposure to industrial, automotive, and data-center markets makes its performance a key indicator of trends in the semiconductor cycle beyond just AI infrastructure.
