Texas Instruments' Stock Slips After Q4 Results, Soft Q1 Earnings Guidance

Texas Instruments Inc. (TXN) stock took a hit after the company reported its fourth-quarter financial results and provided soft guidance for the first quarter of 2025. The Dallas-based semiconductor company reported revenue of $4.01 billion, net income of $1.21 billion, and earnings per share of $1.30. While these numbers beat analyst estimates, they fell short of investor expectations, leading to a decline in TXN stock price.



The company's revenue decreased 3% sequentially and 2% year-over-year, driven by a cyclical downturn in demand for automotive and industrial chips, as well as elevated inventories. Texas Instruments' cash flow from operations for the trailing 12 months was $6.3 billion, underscoring the strength of its business model and product portfolio. However, free cash flow for the same period was $1.5 billion, down from the previous year.



Texas Instruments' first-quarter outlook is for revenue in the range of $3.74 billion to $4.06 billion and earnings per share between $0.94 and $1.16. The company now expects its 2025 effective tax rate to be about 12%, up from its previous estimate of 10%. This increase in the effective tax rate will likely lead to lower net income and earnings per share.



Investors should be concerned about Texas Instruments' stock price decline, as it reflects a broader trend of uncertainty in the semiconductor industry. The company's guidance for the first quarter of 2025 suggests that the recovery in the semiconductor market may not be as robust as previously expected. Additionally, the increase in the effective tax rate could impact Texas Instruments' profitability and shareholder returns.

In conclusion, Texas Instruments' stock price decline after its Q4 results and soft Q1 earnings guidance is a cause for concern. Investors should closely monitor the company's performance and the broader semiconductor market trends to make informed decisions about their investments. As the semiconductor industry continues to evolve, Texas Instruments' ability to adapt and innovate will be crucial for its long-term success.