Texas Instruments Plunges 12.17% on Cautious Q3 Outlook

On July 23, 2025, Texas Instruments experienced a significant drop of 12.17% in pre-market trading, reflecting investor concerns over the company's third-quarter outlook and the impact of trade uncertainties on demand expectations.

Texas Instruments reported strong second-quarter earnings, with revenue and earnings per share (EPS) exceeding market expectations. However, the company attributed this performance to potential tariff-related stockpiling by customers, raising concerns about the sustainability of future demand. The company's guidance for the third quarter was cautious, with an EPS midpoint of $1.48, below analyst expectations of $1.50. Additionally, Texas Instruments highlighted that future tariff uncertainties could impact customer demand, particularly in the automotive sector, which is expected to recover slowly.

The company's core business, particularly in analog chips, showed robust performance, with revenue of $35 billion, a 18% year-over-year increase. This segment primarily serves the automotive and industrial markets, which are crucial for Texas Instruments' growth. However, the company's third-quarter revenue guidance of $44.5 billion to $48 billion, with a midpoint of $46.25 billion, was only slightly above analyst expectations of $45.9 billion. The EPS guidance midpoint of $1.48 was also below analyst expectations of $1.50.

Texas Instruments is planning significant investments, including $600 billion to expand chip manufacturing facilities in Texas and Utah, focusing on 300mm wafer manufacturing technology. This strategic move aims to enhance long-term cost control and production capabilities. However, the company faces challenges such as margin pressure, new tax policies, and fluctuations in factory utilization rates, which could impact its cost structure.