Texas Instruments' Mixed Outlook Sends Stock Tumbling

Texas Instruments (TXN) stock took a tumble in after-hours trading on Thursday, January 23, 2025, following the company's fourth-quarter earnings report. Despite beating analyst estimates for earnings per share and revenue, the company's outlook for the first quarter of 2025 fell short of expectations, sending shares down more than 3% to 193.44. During the regular session, TXN stock had advanced 1.8% to close at 200.58.

Texas Instruments reported fourth-quarter earnings of $1.30 per share on revenue of $4.01 billion, topping analyst estimates of $1.21 per share and $3.88 billion in sales. However, the company's guidance for the first quarter of 2025 was less than encouraging. Texas Instruments expects earnings per share between $0.94 and $1.16 on revenue of $3.74 billion to $4.06 billion. Analysts were looking for earnings per share of $1.17 on sales of $3.85 billion in the first quarter.

The company's mixed outlook can be attributed to several factors. First, the ongoing global economic uncertainty has led to a slowdown in demand for Texas Instruments' products, particularly in the industrial and automotive sectors. Second, higher manufacturing costs and elevated inventories have affected the company's gross margin. Third, geopolitical uncertainty, particularly the ongoing trade tensions between the U.S. and China, has created uncertainty in the global electronics supply chain.

Texas Instruments' performance in the industrial and automotive sectors has been sluggish compared to its other end markets. In the third quarter of 2024, the company reported that industrial demand continued to decline sequentially, while all other end markets grew. Haviv Ilan, TI's president and CEO, stated that the industrial automation and energy infrastructure segments still hadn't found the bottom, indicating that the company is not expecting a quick recovery in these areas. In the automotive segment, growth in China wasn't as strong as it has been, meaning it can't offset the expected weakness in other parts of the world. Ilan also mentioned that the company hasn't seen the bottom yet in these sectors, though it is seeing "points of strength."

While Texas Instruments' earnings report for the fourth quarter of 2024 was generally positive, the company's mixed outlook for the first quarter of 2025 has raised concerns about the company's ability to maintain its growth momentum. Investors will be watching closely to see how Texas Instruments navigates the ongoing challenges in the industrial and automotive sectors and whether the company can achieve its growth targets in the coming quarters.