Texas Instruments Gets Analyst Nod As Auto And Industrial Demand Spark Broad Recovery

Rosenblatt analyst Kevin Garrigan maintained Texas Instruments TXN with a Buy and a $216 price target on Thursday.

Texas Instruments delivered a strong beat and raise on a recovery across all end markets, including industrial. Continued cyclical recovery drives the strong second-quarter 2025 guide as its customers replenish inventory from low levels.

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Management commented that it is difficult to determine whether customer orders are pull-ins before tariff impacts. However, order patterns are consistent with past cycle recoveries (no large orders or panic buying).

While the company has yet to see any impacts from tariffs, though this could change in an instant, Garrigan noted that due to its global manufacturing footprint and prior processes, it is in a strong position to help mitigate tariff impacts.

Garrigan noted that the company is one of the best-positioned to navigate this dynamic environment.

Texas Instruments sales for the first quarter of 2025 were $4.07 billion (+2% Q/Q, +11% Y/Y), above Garrigan’s and consensus $3.9 billion and $3.9 billion estimates, respectively.

Revenues were driven by Q/Q strength across industrial, automotive, enterprise systems, and communications equipment, which was offset by a Q/Q decline in personal electronics.

By segment, both Analog and Embedded Processing grew Q/Q.

Gross margins declined to 56.8% (-90bps Q/Q, -40bps Y/Y), above both Garrigan’s and consensus 55.5% and 55.3% estimates.

Operating margins of 32.5% (-180bps Q/Q, -260bps Y/Y) were above Garrigan’s and consensus of 30.4% and 30.5% estimates.

GAAP EPS of $1.28 was above Garrigan’s and consensus of $1.06 and $1.07, driven by higher top-line, higher gross margin, lower other expenses, and a lower tax rate.

On the cycle, management noted a continued recovery across all end markets, with industrials showing a broad recovery across sectors and geographies.

Inventories are at low levels across all end markets.

Due to uncertainty surrounding the semiconductor and macroeconomic environment, management is preparing for a wide range of scenarios for the second half of 2025 and 2026. The team remains cautious and is working with customers as the impacts of tariffs are unclear.

Management guided second-quarter 2025 revenue to $4.35 billion at the mid-point (+7% Q/Q, +14% Y/Y), above Garrigan’s and consensus of $4.15 billion and $4.10 billion.

Revenues are benefiting from a continued cyclical recovery. Gross margins will likely increase Q/Q.

GAAP EPS guidance at the midpoint will likely be $1.34, above Garrigan’s and consensus $1.22 and $1.21 estimates. Management expects an effective tax rate of 12.5%.

Price Action: TXN stock is up 6.83% to $162.55 at the last check on Thursday.

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