Texas Instruments (TXN) shares closed at $287.80 on Friday, up 0.9%, just shy of their 52-week high of $292.64. The modest gain came after Zacks Research raised its second-quarter earnings estimate for the chipmaker to $1.79 per share from $1.46, according to a note from MarketBeat. The revision follows Texas Instruments' optimistic outlook provided in April.
The Dallas-based semiconductor company has been riding a wave of momentum fueled by the expansion of artificial-intelligence data centers, which has increased demand for its analog chips. These components, which manage power regulation and convert physical signals such as sound and heat into digital data, are not the flashy AI accelerators produced by Nvidia, but they are essential for a wide range of industrial and data center applications.
In the first quarter, Texas Instruments reported revenue of $4.83 billion, a 19% increase year-over-year. Net income reached $1.55 billion, or $1.68 per share. Chairman, President, and CEO Haviv Ilan attributed the growth to strength in industrial and data center markets, with the data center segment surging nearly 90% compared to the same period last year.
Analysts have taken note of the company's performance. Stifel's Tore Svanberg highlighted that the industrial sector is particularly strong and suggested that automotive demand may be entering a new up-cycle. However, Texas Instruments faces challenges, including potential headwinds from trade policy, aggressive pricing, and shifting semiconductor demand, particularly from industrial and automotive customers.
The company continues to return capital to shareholders. It declared a quarterly dividend of $1.42 per share, payable on May 19 to shareholders of record as of May 5. Over the past 12 months, Texas Instruments has returned $6.0 billion to shareholders through dividends and share repurchases.
Looking ahead, Texas Instruments is expanding its product portfolio. In February, the company announced a $7.5 billion acquisition of Silicon Laboratories, which will add wireless-connectivity chips for both industrial and consumer applications. The deal is expected to close in the first half of 2027.
Despite the positive momentum, some caution is warranted. Much of the recent rebound may already be priced into the stock, and the company's guidance for the second quarter calls for revenue between $5.00 billion and $5.40 billion and earnings per share in the range of $1.77 to $2.05. The key test will be whether the company can deliver results at the upper end of that range. If data center orders pause or customers pull back, the stock could face significant downside.
Texas Instruments' stock has climbed sharply over the past year, and with limited room for error, investors will be watching closely when the company reports its second-quarter results.
