Shares of Texas Instruments Inc (NASDAQ: TXN) experienced significant gains amid a wave of revised price targets from Wall Street analysts, spurred by a quarterly earnings report that, while slightly below estimates, reassured investors with indications of steady demand recovery.
The company reported fourth-quarter revenue totaling $4.42 billion, accompanied by earnings per share (EPS) of $1.27. These figures narrowly missed consensus analyst predictions, which had forecasted $4.44 billion in revenue and $1.30 in EPS. Despite this marginal shortfall, revenue increased 10% compared to the prior year, demonstrating underlying business strength.
Looking forward, Texas Instruments issued guidance for first-quarter revenue in the range of $4.32 billion to $4.68 billion and EPS between $1.22 and $1.48. These projections compare favorably with consensus estimates pegging revenue at $4.42 billion and EPS at $1.26, suggesting a positive trajectory in demand.
Market analysts responded by adjusting their outlooks on Texas Instruments' stock. Cantor Fitzgerald's Matthew Prisco held a Neutral rating but increased his price target from $190 to $225, highlighting the company’s stronger-than-expected quarter and the potential for positive sequential revenue growth for the first time since 2010. Benchmark's Cody Acree reaffirmed a Buy rating and raised his price target from $220 to $250, noting the company’s optimistic guidance that ended a period of cautious outlooks over the past two quarters. Rosenblatt’s Kevin Cassidy maintained a Buy stance and increased his price target from $200 to $240, citing evidence of improving demand, particularly in industrial and data center markets.
Prisco underscored that Texas Instruments delivered results exceeding expectations, particularly with its forecast of sequential growth in the upcoming quarter and encouraging gross margin trends, despite a small anticipated dip from previous levels. He pointed to ongoing recovery fueled by improving order volumes, an expanding backlog, and an increase in 'turns' business, which refers to orders shipped within the same quarter. Prisco further identified data center demand and a broad-based rebound in the industrial segment as significant growth drivers, with the first-quarter outlook implying estimated high-single-digit sequential growth in industrial sales. He anticipates gradual industry recovery with sustainable growth areas in data center technologies and advanced driver-assistance systems.
Cody Acree highlighted the stock's after-hours rally of up to 8%, triggered by a notably upbeat outlook for the March quarter, including expectations for sequential growth not seen in more than 20 years. He remarked that Texas Instruments' commentary improved markedly over the previous 90 days, driven by more predictable order patterns and enhanced visibility into backlog through the fourth quarter. Acree also emphasized the company’s growth in 'turns' business and momentum extending across both industrial and automotive segments, which each accounted for approximately one-third of the projected 2025 revenue. Industrial sales increased by 12% year over year, while automotive sales grew 6%, notwithstanding typical seasonal dips in sequential quarters. Additionally, Acree identified the data center segment as a growing contributor, with seven consecutive quarters of robust growth and an estimated $1.5 billion in revenue for 2025, approximately 9% of total sales.
Kevin Cassidy pointed out that Texas Instruments reported an in-line quarter, including an unexpected $0.06 EPS headwind related to goodwill adjustments on legacy products. Despite this, the company’s outlook suggested strengthening demand. Cassidy noted that guidance projecting roughly 1.5% sequential revenue growth surpassed analyst expectations, chiefly due to higher order rates from industrial and data center customers. He interpreted these developments as signs of expanding industrial demand and accelerating data center growth. Cassidy also highlighted management’s disclosure of a 70% year-over-year surge in data center revenue during the fourth quarter of fiscal 2025. Based on this momentum, Cassidy expects the data center business to account for over 12% of total revenue in 2026, up from approximately 9% in 2025. Furthermore, Cassidy emphasized Texas Instruments' leadership in several analog product categories, ongoing expansion of higher-margin 300mm wafer fabrication capacity, and the benefit of carrying inventories that facilitate short lead times, all factors positioning the company well for a broader semiconductor cycle recovery.
While acknowledging that the Analog, Embedded Processing, and Other segments experienced sequential declines, Cassidy emphasized management's perspective that the market recovery remains intact, driven especially by the industrial and data center segments.
At market close on Wednesday, Texas Instruments’ share price was $214.87, reflecting a 9.25% increase. This notable rise followed the encouraging earnings report and raised analyst price targets, underscoring renewed investor confidence in the company's strategic positioning and growth prospects across key end markets.