Texas Instruments releases optimistic outlook, leaving investors with high expectations unmoved
Analog and embedded processing chip manufacturer The sales outlook was higher than analysts' expectations but failed to cheer up investors who have driven the stock's surge so far this year. The company said in a statement Wednesday that third-quarter revenue will be between $5.65 billion and $6.15 billion. Analysts on average expected $5.62 billion, according to data compiled by Bloomberg. The outlook suggests Texas Instruments has become a major beneficiary of AI spending. Resurgence in demand for chips used in cars and factory equipment, which have long been the backbone of the company's business, is also boosting results. Texas Instruments CEO Haviv Ilan said the company is benefiting from "broad-based growth" across various industries. Chief Executive Haviv Ilan said in a statement that revenue growth benefited from "broad-based growth led by the industrial, data center and automotive sectors." However, the company is facing extremely high market expectations after its share price has risen 70% this year. After the news was announced, its stock price fell about 3% in after-hours trading. The company expects current-quarter profit per share to be $2.23 to $2.57. That compares with analysts' average estimate of $2.15 per share. Second-quarter revenue rose 23% to $5.46 billion, above analysts' average estimate of $5.24 billion. Earnings per share were $2.14. Texas Instruments is the first major U.S. semiconductor manufacturer to provide an outlook this earnings season, helping investors calibrate expectations. The company has the broadest product lineup and customer base in the industry and has made significant progress in artificial intelligence data centers, with its chips powering high-end components from companies like Nvidia. The company is returning to relatively low spending levels after years of spending on new factories. These modernization upgrades should help Texas Instruments produce products at lower costs, thereby increasing profitability.