Texas Instruments Q4 Earnings Call Highlights

Key Points

• Q4 results and Q1 guide: Revenue was $4.4 billion (down 7% sequentially, up 10% YoY) and EPS was $1.27 including a $0.06 goodwill/tax hit; management guided Q1 revenue to $4.32–4.68 billion and EPS to $1.22–1.48.
• End‑market shift toward higher‑value segments: TI added a “data center” category after ~70% YoY data‑center growth, and industrial, automotive and data center now comprise roughly 75% of 2025 revenue (industrial and automotive each ~$5.8B, 33% apiece).
• Cash generation and shareholder returns remain strong: Quarterly operating cash flow was $2.3B (FY $7.2B) with free cash flow of $2.9B (up 96% YoY), the dividend was raised 4% to $1.42 (22nd consecutive increase), buybacks continued, and 2026 capex is guided to $2–3B with CHIPS Act funding expected up to $1.6B.

Texas Instruments NASDAQ: TXN reported fourth-quarter 2025 revenue of $4.4 billion, which Chairman, President and CEO Haviv Ilan said came in “about as expected.” Revenue declined 7% sequentially but increased 10% from the same period a year earlier, as the company continued to see a recovery across parts of the semiconductor market.

By segment, Ilan said analog revenue grew 14% year-over-year, while embedded processing increased 8%. The company’s “Other” segment declined versus the year-ago quarter. Ilan added that Texas Instruments believes it is well positioned with inventory and capacity to meet near-term customer demand.

End-market update and quarterly demand trends

Texas Instruments said it has reorganized its end-market reporting to include a new “data center” category, reflecting what it sees as expanding opportunities for its analog and embedded products. The company’s end markets are now industrial, automotive, data center, personal electronics, and communications equipment.

In the fourth quarter, Ilan provided the following end-market revenue trends:

• Industrial: up high teens year-over-year and down mid-single digits sequentially, with recovery continuing broadly across sectors.
• Automotive: up upper single digits year-over-year and down low single digits sequentially.
• Data center: up around 70% year-over-year and up mid-single digits sequentially.
• Personal electronics: down upper teens year-over-year and down mid-teens sequentially.
• Communications equipment: down low single digits year-over-year and down mid-teens sequentially.

Full-year 2025 end-market mix

As part of its annual disclosure, Texas Instruments outlined estimated 2025 revenue by end market, emphasizing a longer-term shift toward industrial, automotive, and data center exposure.

• Industrial: $5.8 billion, up 12% year-over-year (33% of revenue)
• Automotive: $5.8 billion, up 6% year-over-year (33% of revenue)
• Data center: $1.5 billion, up 64% year-over-year (9% of revenue)
• Personal electronics: $3.7 billion, up 7% year-over-year (21% of revenue)
• Communications equipment: about $500 million, up about 20% year-over-year (3% of revenue)

Ilan noted that industrial, automotive, and data center collectively represented about 75% of 2025 revenue, compared with roughly 43% in 2013. He said the company places “additional strategic emphasis” on those markets and cited “secular content growth” as customers use more analog and embedded technology to improve reliability, reduce power, and lower costs.

Profitability, cash flow, and capital returns

CFO Rafael Lizardi reported fourth-quarter gross profit of $2.5 billion, or 56% of revenue. Gross margin fell 150 basis points sequentially. Operating expenses were $967 million, up 3% year-over-year, and operating profit was $1.5 billion, or 33% of revenue, up 7% from the year-ago quarter.

Net income for the quarter was $1.2 billion, or $1.27 per share. Lizardi said EPS included a $0.06 reduction versus the company’s original guidance tied to a non-cash goodwill impairment in the “Other” segment and additional tax-related items.

On cash generation and capital allocation, Texas Instruments reported:

• Cash flow from operations: $2.3 billion (quarter)
• Capital expenditures: $925 million (quarter)
• Dividends paid: $1.3 billion (quarter)
• Share repurchases: $403 million (quarter)

The company also increased its quarterly dividend 4% to $1.42 per share, marking its 22nd consecutive year of dividend increases. Lizardi said Texas Instruments returned $6.5 billion to shareholders over the past 12 months.

At quarter end, Texas Instruments had $4.9 billion in cash and short-term investments and $14 billion of total debt with a weighted average coupon of 4%. Inventory ended the quarter at $4.8 billion, down $25 million sequentially, with days of inventory at 222 (up seven days sequentially).

For full-year 2025, the company reported $7.2 billion of operating cash flow, $4.6 billion of capital expenditures, and free cash flow of $2.9 billion (17% of revenue), which Lizardi said was up 96% from 2024. Texas Instruments also received a $670 million cash benefit related to CHIPS Act incentives in 2025.

Q1 2026 guidance and key themes from Q&A

For the first quarter of 2026, Texas Instruments guided revenue to a range of $4.32 billion to $4.68 billion and earnings per share of $1.22 to $1.48. Lizardi said the company continues to expect an effective tax rate of about 13% to 14% for 2026.

During the Q&A, analysts focused on Texas Instruments’ first-quarter outlook, which management characterized as driven by improving orders rather than pricing. Ilan said the company has seen continued industrial recovery and “continued strength in data center,” and he pointed to stronger bookings as a key driver of the guidance. Investor Relations Head Mike Beckman added that revenue linearity improved through the quarter, backlog built throughout the period, and “turns business” remained elevated.

On pricing, Ilan said the company is not raising prices as a driver of the first-quarter guide. He reiterated that overall pricing in 2025 was low single digits down (citing 2% to 3% as a way to think about it) and said that is also his assumption for 2026, while noting Texas Instruments would respond if market conditions change. Beckman added there was “definitely no step function planned in Q1” and said pricing typically declines in the first quarter due to annual negotiations.

Management also addressed inventory and manufacturing. Ilan said Texas Instruments is “very pleased” with its inventory position, describing it as an asset that supports customers in a just-in-time demand environment. On factory loadings, management said it would adjust based on demand but indicated there was nothing significant to disclose versus fourth-quarter levels.

On capacity expansion, Ilan said the company is pleased with execution in Sherman, Texas, noting the ramp is ahead of schedule with high yields and improved capability with new equipment. He also said the company is on schedule in Lehi and highlighted progress insourcing foundry wafers, including completion of a 65-nanometer transition and ongoing work on 45-nanometer technology for automotive radar applications.

For 2026, Lizardi reiterated expected capital expenditures of $2 billion to $3 billion and provided an updated 2026 depreciation outlook of $2.2 billion to $2.4 billion. He also said direct CHIPS Act funding expectations remain up to $1.6 billion tied to milestones, and that the investment tax credit is 35% as of Jan. 1, 2026, applying to qualifying 2026 capital spending.

Texas Instruments said it will host a capital management call on Tuesday, Feb. 24 at 10:00 a.m. Central Time.

About Texas Instruments NASDAQ: TXN

Texas Instruments Inc NASDAQ: TXN is a global semiconductor company headquartered in Dallas, Texas, that designs and manufactures analog and embedded processing chips. The company's products are used across a wide range of end markets, including industrial, automotive, personal electronics, communications and enterprise equipment. TI's business emphasizes components that condition, convert, manage and move electrical signals—capabilities that are foundational to modern electronic systems.

TI's product portfolio includes a broad array of analog integrated circuits—such as power management, amplifiers, data converters and interface devices—as well as embedded processors and microcontrollers used to control systems and run real-time applications.

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