Texas Instruments Earnings on Deck: Can the Analog Giant Spark a Comeback Beyond AI?

Texas Instruments (TXN) reports earnings tonight after the close, offering a key read on the health of analog and embedded semiconductors outside the AI chip frenzy. The company—whose chips serve as the basic “building blocks” in everything from autos and industrial machinery to consumer electronics—has been quietly positioning for a cyclical rebound. While it lacks direct exposure to the AI data center boom, management believes the broader semiconductor recovery is taking hold, noting last month that four of its five end markets are now improving, with data center demand described as its “fastest growing market.” Shares have climbed off the $170 area and pushed above the 20-day moving average for the first time in two weeks, reflecting growing investor optimism ahead of the report.

Expectations and Guidance Wall Street expects Q3 EPS of $1.49 on $4.64 billion in revenue, with the top end of estimates reaching $1.57 and $4.8 billion, respectively. Full-year EPS is projected at $5.59 on $17.65 billion in revenue. The implied post-earnings move is roughly ±5.2%, and the stock trades near $178 with a consensus “Hold” rating and an average price target of $197. Management guided for Q3 revenue between $4.45 billion and $4.8 billion and EPS of $1.36–$1.60, signaling expectations for a modest sequential improvement despite geopolitical and tariff headwinds. CFO Rafael Lizardi noted the outlook “does not include changes related to recently enacted U.S. tax legislation,” suggesting potential upside to future cash flow once the policy’s effects are reflected.

Recent Commentary and Market Signals At the September 10 industry conference, CEO Haviv Ilan said, “We see a semiconductor recovery,” emphasizing that “data center is the fastest recovering market” and that “four out of five markets we operate in are in recovery.” That upbeat tone, however, contrasts with the more cautious stance taken at the end of Q2, when management warned of potential normalization after a hot quarter for industrial and China demand. Ilan acknowledged that “China was running a little bit hot in Q2,” implying growth there could cool into year-end. Investors will be listening closely for updated commentary on both China, which accounts for about 19% of total revenue, and the automotive segment, which has yet to fully recover.

Key Segments to Watch Texas Instruments’ performance in its core analog and embedded processing segments remains the heartbeat of its earnings story. The industrial segment, which represents roughly 40% of sales, showed mid- to high-teens growth last quarter, while enterprise systems and communications surged over 40% and 50%, respectively. Auto demand has been more mixed—flat sequentially and up mid-single digits year-over-year—but remains a focal point for analysts concerned about softer EV sales and fading consumer sentiment. Mizuho recently cut its price target from $200 to $150, citing risks in North American EV demand and China competition, along with “anti-dumping” tariff pressures that could weigh on margins.

Tariffs, Costs, and Margins Management has acknowledged that tariffs and shifting supply chains are creating friction across the industry. CEO Ilan has said, “tariffs and geopolitics are disrupting and reshaping global supply chains,” though Texas Instruments’ extensive manufacturing footprint—including facilities in the U.S. and Europe—has helped buffer the impact. Gross margins reached 58% in Q2, up 110 bps sequentially, and operating margins were stable at 36%. Analysts will focus on whether cost absorption and CapEx normalization can keep margins above 55% through 2026, especially as depreciation ramps from new 300mm fab capacity.

Valuation Context At roughly 25x consensus 2026 EPS, TXN trades at a premium to peers like Analog Devices (ADI), which sports stronger free cash flow metrics. Bank of America recently downgraded the stock to “Underperform,” arguing the premium multiple “could be difficult to sustain given near-term uncertainty and limited exposure to AI CAPEX cycles.” Still, bulls see a case for stabilization as inventories normalize and industrial demand firms up. The long-term view is supported by Texas Instruments’ deep end-market diversity, broad customer base, and vertical integration strategy that cushions cyclicality better than most chipmakers.

Investor Sentiment and Technical Setup From a technical standpoint, the stock has reclaimed the 20-day moving average for the first time in two weeks—an encouraging short-term signal. Traders appear to be positioning for a modest upside surprise or, at minimum, a stabilization narrative. The options market’s ±5% implied move sets a low volatility bar compared to the group, where peers like Nvidia and AMD have regularly posted double-digit swings post-earnings.

What to Watch Tonight

Management tone on the pace of the recovery across key verticals—especially industrial, communications, and automotive.

Updates on China demand trends and any commentary on tariff exposure or manufacturing adjustments.

Margin resilience amid elevated depreciation and capital intensity.

Commentary on 2026 free cash flow trajectory and the potential benefit from new U.S. tax policy.

Confirmation that data center and industrial orders remain firm heading into Q4.

In short, Texas Instruments enters earnings at a crossroads: industrial and communications recovery provide tailwinds, but tariffs, China competition, and a lack of AI leverage temper enthusiasm. Investors will look for management to reinforce that the recovery is broad-based—and sustainable enough—to justify holding a premium valuation into 2026.