Shares of Texas Instruments (TXN +19.43%) rallied 19.5% on Thursday as of 12:38 p.m. EDT, sending shares to a new all-time high.
The embedded and analog semiconductor sector, which Texas Instruments leads, has been in a longer-than-usual downturn since the post-pandemic crash that began in 2023. However, last night's outstanding earnings report and guidance seemed to indicate that the long downturn is over and the up cycle has a ways to run.
NASDAQ: TXN
Key Data Points
TI trounces expectations
In the first quarter, Texas Instruments showed revenue growth of 18.7% to $4.83 billion, while earnings per share rallied 31.3% to $1.68 per share. Both figures handily beat expectations. Management guided for continued strength in the current quarter, projecting revenue of $5.0 billion to $5.4 billion and EPS of $1.77 to $2.05, relative to analyst estimates of $4.87 billion and $1.57, respectively.
Texas Instruments appears to be benefiting from multiple tailwinds all at once. After a multi-year industrial and auto chip down-cycle, these sectors appear to be bouncing back. In addition, AI data centers are increasingly using lots of analog, embedded, and power chips. The data center division was up a whopping 90% year-over-year, while industrial chips were up 30%, and auto chips were up mid-single-digits.
The data center segment only accounted for about 9% of TI's revenue in 2025, but with growth like that, it is sure to become a more significant driver of growth going forward.
In even better news, TI is also winding down a period of intense capital spending, having completed the heaviest stage of its multi-year investment plan to build out U.S.-based manufacturing in Texas. As a result, capital expenditures were down, and free cash flow rocketed higher. Over the past 12 months, TI has generated $4.4 billion in free cash flow, up 154% from the $1.7 billion generated in the prior 12-month period.
Image source: Getty Images.
Texas Instruments breaks out
As you can see from the chart above, the blockbuster earnings report catapulted TI's stock above the range in which it's traded over the past five years. While the stock currently looks expensive, at around 43 times this year's earnings estimates, it seems like a good bet TI will outperform those estimates, which should be revised higher throughout the year.
