Texas Instruments topped Wall Street's outlook on more than just data-center demand

By Steve Goldstein

TI says industrial demand keeps improving while data-center segment flourishes

Texas Instruments, headquartered in Dallas, beat Wall Street expectations with both its revenue and its earnings.

Texas Instruments, one of the microchip makers most exposed to the manufacturing sector, raised its outlook after seeing strong demand from industrial customers as well as from the buildout of data centers.

"I will say that the industrial signal was a little bit broader this time," said Chairman and CEO Haviv Ilan in a call with analysts Wednesday evening, according to a FactSet transcript. "I would say, it's now five or six months of continued growth in industrial. We want to keep watching it, but I would say that's what guides our forecast into Q2."

Industrial revenue is still 16% below its fourth-quarter 2021 peak, according to Citigroup analysis.

Artificial-intelligence demand also helped the microchip maker as it saw 90% year-on-year growth from data centers, marking its eighth consecutive quarter of sequential growth in that segment.

The Dallas-based company said its second-quarter revenue will range between $5 billion and $5.4 billion, as earnings per share will range from $1.77 to $2.05. Analysts had expected earnings of $1.78 per share in the second quarter on sales of $5.06 billion.

TI earned $1.68 a share in the first quarter, which, even discounting a 5-cent benefit from taxes that wasn't in its original guidance, was still considerably ahead of the $1.36-a-share analyst estimate. Sales of $4.82 billion also topped the $4.53 billion consensus.

Texas Instruments says it didn't benefit from rising prices, though it may increase prices in the second half of the year.

TI shares (TXN) surged 19.4% on Thursday. Heading into the results, the stock had gained 36% this year, slightly below the 40% gain for the broader SOX microchip index SOX.

"The central market debate remains the durability of the current cyclical demand strength, particularly as the Street was quick to ask if this is another first-half headfake, similar to last year, or the start of a more durable analog recovery," said Benchmark & Co. analyst Cody Acree. "We tend to lean toward the latter, particularly given the markets consistently improving demand signals across a mix of end markets, both AI levered, and those more economically diverse."

STMicroelectronics (STM) (IT:STMMI), which like TI makes analog microchips, saw its stock climb 10.8% after its own set of results.

STMicro reported earnings of 13 cents a share on sales of $3.09 billion, which was a miss on earnings but was in line with the analyst consensus on sales, as it guided for $3.45 billion in second-quarter sales, above the $3.18 billion that analysts estimated.

The Geneva, Switzerland-based company credited demand from its personal electronics and its communications equipment and computer peripherals divisions for the revenue growth.

-Steve Goldstein

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04-23-26 1638ET