TI Q4 Outlook Beats Estimates, Expansion Delayed
According to Texas Instruments, strong demand from automotive and industrial customers is supporting a robust revenue outlook for the current quarter, as the semiconductor manufacturer continues to benefit from growth across multiple end markets, including data centers.
In a statement released on Wednesday, Texas Instruments forecast revenue of $5.8 billion to $6.3 billion for the quarter ending in December. The outlook exceeded the average analyst estimate of $5.73 billion, according to data compiled by Bloomberg.
The positive forecast offers an encouraging signal for the broader semiconductor industry, which has faced concerns about a potential artificial intelligence (AI) bubble. Texas Instruments reported broad-based growth across industrial, automotive, and data center markets. Its diversified customer base has helped the company benefit from demand beyond the core AI infrastructure market.
Shares of Texas Instruments closed at $284.65 in New York trading before remaining largely unchanged in after-hours trading. The stock has gained 64% since the beginning of the year.
The company expects earnings per share of $2.45 to $2.79 for the current quarter, above Wall Street's previous estimate of $2.26. For the third quarter, revenue increased 28% year over year to $6.06 billion, exceeding the average analyst forecast of $5.93 billion. Earnings per share reached $2.62.
Chief Executive Officer Haviv Ilan said Texas Instruments plans to expand manufacturing capacity to meet growing orders. The company expects its 2026 capital expenditure budget for new manufacturing facilities and equipment, initially set at $2 billion to $3 billion, to come in near the upper end of that range. However, Ilan noted that strong demand for new semiconductor manufacturing equipment and extended delivery lead times are limiting the pace at which the company can increase production capacity.
During a conference call with analysts following the earnings announcement, Ilan said the data center business currently accounts for approximately 13% of total revenue, with revenue from the segment increasing 95%.
Texas Instruments is the world's largest manufacturer of foundational semiconductor chips produced using relatively mature manufacturing processes. These components are essential to a wide range of applications, from aerospace systems to consumer electronics. Automotive and industrial applications remain the company's two largest markets, making its financial performance an important indicator of broader economic demand.
Although Texas Instruments does not manufacture the advanced digital processors that perform intensive computing tasks in AI data centers, its power management chips and other semiconductor components play important roles in servers and networking equipment. As investment in AI infrastructure expands, demand for these supporting components is creating additional growth opportunities for the company.
Analog chips and embedded processors convert real-world inputs into electronic signals and enable devices to sense, control, and respond to their surroundings. They are widely used in products across numerous industries, including equipment that requires electronic switching and control. These technologies are also essential to data center infrastructure, where semiconductor components help regulate power delivery to high-performance processors and support the reliable operation of increasingly complex electronic systems.
