Texas Instruments (NASDAQ:TXN) delivered second-quarter results that surpassed Wall Street expectations, bolstered by solid recovery in its industrial segment. Despite the earnings beat, shares plunged 11.4% in premarket trading, falling to $190.37 as of 04:19 ET (08:19 GMT), after the company issued a conservative outlook for the third quarter.
The chipmaker reported a 16% year-over-year revenue increase, reaching $4.45 billion, which matched the upper end of its own forecast and outpaced analysts’ projections of $4.35 billion. Quarterly earnings per share stood at $1.41, slightly ahead of estimates and including a 2-cent benefit not previously anticipated.
Sequentially, revenue climbed 9%, driven by what the company described as a “continued broad recovery in industrial,” its largest market segment. Net income for the quarter was reported at $1.30 billion.
Looking ahead, Texas Instruments projected third-quarter revenue in the range of $4.45 billion to $4.80 billion and EPS between $1.36 and $1.60—guidance that sits below the market consensus of $4.55 billion in revenue and $1.49 in EPS.
Over the past 12 months, the company generated $1.8 billion in free cash flow while capital expenditures totaled $4.9 billion. During the same period, it returned $6.7 billion to shareholders.
“We recommend adding TXN positions after shares fell in after-hours trading,” said Evercore ISI analyst Mark Lipacis. “We observe that semis generally and TXN specifically often give back some of their initial outperformance early in the recovery cycle, and that these early-cycle corrections have proven to be good opportunities to buy the stock,” he added.
Stifel analysts also weighed in with a cautious tone, noting early signs of a rebound but questioning its staying power. “The potential tariff impacts on the company’s recent recovery remains difficult to assess and quantify,” they said. Stifel also noted that order activity slowed through Q2, although trends have appeared to stabilize in more recent weeks.
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