Summarize the key points in the TXN earnings transcript looking for clues in the demand in end markets including those question posed by analysts during the call: fool.com
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Texas Instruments Incorporated
TXN
·
NASDAQ
·
$170.84
-$10.00
5.53% 1D
Oct 22, 3:55:54 PM EDT
Prev Close
$180.84
52W Range
$140.0 - $221.7
Market Cap
$155.32B
Open
$163.96
P/E Ratio
31.29
Dividend Yield
3.19%
Day Range
$163.0 - $173.1
Volume
20M
EPS
$5.46
- Texas Instruments’ Q3?2025 earnings call revealed solid growth across most end markets, with particular strength in communications, enterprise, and industrial segments, though management cautioned that overall semiconductor recovery remains slow and uneven. Demand commentary and analyst questions centered on macro caution, inventory normalization, and visibility into Q4?and early?2026.
Core financial results- Revenue was?$4.7?billion?(+14%?Y/Y?and?+7%?Q/Q), driven by 16%?growth in?Analog?and?9%?in?Embedded?Processing?segments?.?
- Gross margin?stood at?57%, down?50?bps sequentially due to?higher depreciation?and?lower factory loadings?.?
- EPS?was?$1.48?including?$0.10?in?restructuring and closure charges?related to?the phase-out?of?older?fabs?.?
- Q4?guidance:?$4.22–$4.58?billion?revenue,?$1.13–$1.39?EPS, and?lower loadings?pressuring margins further?.?
End-market trends-?Industrial?rose?~25%?Y/Y?and?low single digits?Q/Q;?seen?flattening?after?a strong?Q2?.?
-?Automotive?was?up?upper-single-digits?Y/Y?and?~10%?Q/Q,?with?consistent?regional?strength?.?
-?Communications?equipment?(+45%?Y/Y)?and?Enterprise?systems?(+35%?Y/Y)?were?the strongest?drivers,?both?connected?to?data-center?build-outs?.?
-?Personal?electronics?grew?low?single?digits?Y/Y?and?high-single-digits?Q/Q?as?consumer?demand?stabilized?.?
-?Management?said?the?data-center?market?is?now?a?$1.2?billion?annual?run-rate?business,?up?50%?YTD?and?will?be?broken?out?separately?next?quarter?.?
Analyst Q&A highlights- UBS (Tim?Arcuri)?asked?about?booking?patterns?and?gross?margin?compression;?management?said?order?flow?was?steady?through?Q3?and?lower?loadings?will?pressure?margins?in?Q4?.?
- Citigroup (Chris?Danely)?probed?restructuring?benefits?and?industrial?vs?automotive?trends;?TI?confirmed?closure?of?its?last?150-mm?and?250-mm?fabs?with?cost?savings?visible?in?2026?.?
- Morgan?Stanley (Joe?Moore)?asked?about?pricing?and?lead?times;?TI?expects?low-single-digit?price?declines?for?2025?and?stable?lead?times?thanks?to?inventory?discipline?.?
- Bernstein (Stacy?Rasgon)?and?Deutsche?Bank (Ross?Seymore)?pressed?on?gross?margin?and?depreciation?trends;?TI?foresees?Q4?GM?around?55%?and?2026?depreciation?at?the?low?end?of?$2.3–$2.7?billion?.?
- Goldman?Sachs?(Jim?Snyder)?inquired?about?China?and?CapEx;?China?demand?“normalized”?after?pull-ins?last?quarter,?and?CapEx?is?likely?at?the?lower?end?of?the?2020–26?plan?as?growth?moderates?.?
- Wolfe?Research?(Chris?Caso)?focused?on?the?slower?recovery;?TI?linked?the?moderation?to?industrial?customers’?CapEx?hesitancy?amid?tariff?and?trade-policy?uncertainty?.?
- Jefferies (Blayne?Curtis)?asked?whether?inventory?would?stay?flat?until?demand?rebounds;?TI?said?yes,?current?$4.8?billion?inventory?is?optimal?and?loadings?will?stay?limited?until?revenue?accelerates?.?
- Stifel?(Tore?Svanberg)?queried?why?communications?was?so?strong;?TI?confirmed?it?was?driven?by?data-center?optical?and?network?hardware?demand?and?plans?to?disclose?that?market?separately?.?
Demand tone and management outlookExecutives?said?customer?inventory?depletion?“appears?to?be?behind?us,”?but?the?industrial?recovery?remains?slow?due?to?global?uncertainty?and?hesitant?factory?investments?.?Automotive?and?data?center?are?the?only?clearly?growing?verticals,?while?consumer?and?industrial?are?stabilizing.?TI?will?continue?to?prioritize?manufacturing?ownership?and?free?cash?flow?discipline,?keeping?CapEx?flexible?and?maintaining?its?22-year?record?of?dividend?increases? |
