MW Texas Instruments finally sees growth on the horizon, but it's a slow recovery
8:25 PM ET 1/23/25 | MarketWatch
By Emily Bary
The semiconductor company predicts a return to growth after more than two years of revenue declines, but the industrial and automotive markets have yet to bottom
Texas Instruments Inc.'s business has been in decline for more than two years, but the company expects it will likely see growth again in the current quarter.
That's implied by the semiconductor company's revenue outlook, which calls for $3.74 billion to $4.06 billion for the first quarter. The range is well above the $3.66 billion that Texas Instruments (TXN) posted a year before.
But first, investors are digesting the continued sluggish trends seen in the fourth quarter, when revenue fell 2% from a year earlier to come in at $4.01 billion. Analysts tracked by FactSet had been modeling $3.88 billion.
Texas Instruments makes chips for the industrial and automotive markets, both of which have spent years under pressure. Edward Jones analyst Logan Purk said the company's outlook reflects an expectation for its analog markets to "slowly recover from prolonged industry weakness."
The stock fell 4.6% in Thursday's extended session.
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Some of Texas Instruments' markets are "already on the cyclical upturn," Chief Executive Haviv Ilan said on the earnings call, according to a FactSet transcript. But in terms of the big industrial and automotive markets, he and his team "haven't seen the bottom yet," Ilan added.
The company's projection of a return to growth "could drive investor excitement about a general recovery in chip demand outside of the still white-hot AI markets," Purk said in a note to clients. "However, with industrial and auto end-markets still somewhat weak, we think investors will focus on the pace of recovery."
He said that in many cycles, there's a "sharp uptick." In this case, though, there's only been "gradual improvement."
Meanwhile, Wall Street also must consider the company's forecast for 94 cents to $1.16 in first-quarter earnings per share. That compares with the $1.17 FactSet consensus.
"Costs remain elevated because the company continues to buildout new capacity additions," Purk wrote, while maintaining his hold rating on the stock. "This will likely weigh on profitability until new fabrication plants are fully up and running."
Read: Boeing warns investors to brace for steeper quarterly losses, lower revenue
-Emily Bary
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