Texas Instruments’ second quarter results came in above Wall Street expectations, but the market responded negatively as management signaled caution regarding the sustainability of recent growth. CEO Haviv Ilan attributed revenue momentum to broad-based recovery across most end markets, particularly industrial, communications equipment, and personal electronics, each posting double-digit year-over-year gains. However, Ilan pointed to ongoing disruptions from tariffs and geopolitical tensions, which have complicated global supply chains and customer purchasing behavior. “We continue to see two distinct dynamics at play: tariffs and geopolitics are disrupting and reshaping global supply chains, and the semiconductor cycle is playing out,” Ilan explained, emphasizing the company’s efforts to maintain manufacturing flexibility.
Is now the time to buy TXN? Find out in our full research report (it’s free).
Texas Instruments (TXN) Q2 CY2025 Highlights:
- Revenue: $4.45 billion vs analyst estimates of $4.36 billion (16.4% year-on-year growth, 2% beat)
- EPS (GAAP): $1.41 vs analyst estimates of $1.33 (5.8% beat)
- Adjusted EBITDA: $2.04 billion vs analyst estimates of $1.99 billion (46% margin, 2.9% beat)
- Revenue Guidance for Q3 CY2025 is $4.63 billion at the midpoint, roughly in line with what analysts were expecting
- EPS (GAAP) guidance for Q3 CY2025 is $1.48 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 35.1%, up from 32.7% in the same quarter last year
- Inventory Days Outstanding: 234, down from 243 in the previous quarter
- Market Capitalization: $171.9 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Texas Instruments’s Q2 Earnings Call
- Stacy Rasgon (Bernstein Research) questioned management’s apparent shift in tone and outlook, asking why guidance had become more cautious. CEO Haviv Ilan attributed this to temporary demand boosts from tariffs and the need for flexibility given ongoing geopolitical uncertainty.
- Ross Clark Seymore (Deutsche Bank) sought clarification on whether the normalization of industrial demand and changes in tariff policy influenced Q3 guidance. Ilan responded that both factors contributed, emphasizing the difficulty in distinguishing between real demand and inventory pull-ins.
- Vivek Arya (Bank of America) pressed for details on specific end markets driving the softer Q3 outlook. Ilan pointed to “industrial running very hot” in Q2 and higher demand from China, warranting a more conservative forecast.
- Christopher James Muse (Cantor) inquired about the drivers of flat gross margins despite revenue growth, specifically the impact of depreciation and fab utilization. CFO Rafael Lizardi confirmed increased depreciation was the main factor, with stable fab loadings and inventory growth pacing more slowly in Q3.
- William Stein (Truist Securities) asked for perspective on the sustainability of enterprise segment growth, particularly exposure to data centers and AI. Ilan stated that data center-related business was growing well and highlighted ongoing efforts to expand into application-specific opportunities, especially as new technology ramps up in Sherman, Texas.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be monitoring (1) the normalization of industrial demand as inventory and tariff-driven effects fade, (2) signs of recovery in the automotive segment, which could add momentum if it materializes, and (3) the impact of ongoing manufacturing investments and policy changes—such as new U.S. tax legislation—on both margins and free cash flow. Developments in geopolitical risk and customer supply chain strategies will also be closely watched.
Texas Instruments currently trades at $189.39, down from $214.88 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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