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TEXAS INSTRUMENTS (TXN)·Q4 2025 Earnings Summary

Texas Instruments Jumps 5% After-Hours on Strong Q1 Guidance

January 27, 2026 · by Fintool AI Agent

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Texas Instruments reported Q4 2025 results that met guidance while delivering a Q1 2026 outlook above Street expectations . Revenue of $4.42 billion increased 10% year-over-year, and EPS of $1.27 included a one-time 6-cent charge. The stock surged over 5% after-hours on the stronger-than-expected forward guidance.

Did Texas Instruments Beat Earnings?

Q4 2025 results came in at the midpoint of guidance provided in October :

MetricQ4 2025 ActualQ4 Guidance Midpointvs. GuidanceQ4 2024YoY Change
Revenue$4.42B $4.40B+0.5%$4.01B +10%
EPS$1.27 $1.26+0.8%$1.30 -2%
Operating Profit$1.47B ——$1.38B +7%
Net Income$1.16B ——$1.21B -3%

Context: The EPS of $1.27 included a 6-cent reduction that was not in the company's original guidance . Excluding this charge, adjusted EPS would have been approximately $1.33, representing a meaningful beat versus guidance.

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What Did Management Guide?

Q1 2026 guidance exceeded Street consensus, driving the after-hours rally :

MetricQ1 2026 GuidanceMidpointStreet Consensusvs. Consensus
Revenue$4.32B - $4.68B $4.50B$4.44B*+1.3%
EPS$1.22 - $1.48 $1.35$1.29*+4.7%

*Values retrieved from S&P Global

The guidance range implies sequential revenue up 2% at the midpoint (from $4.42B in Q4 to $4.50B), a notable improvement from the typical seasonal pattern of flat-to-down in Q1 .

What Changed From Last Quarter?

Sequential Trends (Q3 → Q4 2025):

MetricQ3 2025Q4 2025Sequential Change
Revenue$4.74B $4.42B -7%
Operating Profit$1.66B $1.47B -11%
Gross Margin57.4% 55.9% -150 bps

Key Dynamics:

  • Revenue declined 7% sequentially as expected—consistent with Q4 seasonality
  • Gross margin compressed due to continued elevated depreciation from capacity investments
  • Free cash flow surged 96% YoY on a trailing 12-month basis to $2.94B

Segment Performance

Analog continues to drive the majority of growth, with all segments up year-over-year :

Segment Breakdown

SegmentQ4 2025 RevenueQ4 2024 RevenueYoY Change% of Total
Analog$3.62B $3.17B +14%82%
Embedded Processing$662M $613M +8%15%
Other$146M $220M -34%3%

Full Year 2025 Performance:

  • Analog: $14.0B (+15% YoY) with operating profit of $5.4B (+17% YoY)
  • Embedded: $2.7B (+6% YoY) with operating profit of $304M (-14% YoY)

End Market Breakdown (New Disclosure)

TI reorganized end market reporting in Q4 2025, adding Data Center as a standalone category to better reflect growth opportunities :

End Market2025 Revenue% of RevenueYoY GrowthQ4 Sequential
Industrial$5.8B 33%+12%Down mid-single digits
Automotive$5.8B 33%+6%Down low-single digits
Data Center$1.5B 9%+64%Up mid-single digits
Personal Electronics$3.7B 21%+7%Down mid-teens
Communications Equipment$0.5B 3%+20%Down mid-teens

Key Insight: Industrial, automotive, and data center combined now represent 75% of TI revenue, up from 43% in 2013 . These are the company's strategic focus areas where secular content growth is strongest.

Data Center Commentary: Management noted data center has now grown for 7 consecutive quarters, exiting 2025 at approximately $450M/quarter run rate . Most revenue is analog (power and signal chain), with TI's new BCD process in Sherman, Texas supporting higher-power rails for AI accelerators .

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Cash Flow and Capital Allocation

Texas Instruments continues to prioritize free cash flow per share growth and shareholder returns :

Metric (TTM)Q4 2025Q4 2024YoY Change
Cash from Operations$7.15B $6.32B +13%
Capital Expenditures$4.55B $4.82B-6%
Free Cash Flow$2.94B $1.50B +96%
FCF % of Revenue16.6% 9.6% +700 bps

Shareholder Returns (TTM):

  • Dividends: $5.0B (+4% YoY)
  • Stock Repurchases: $1.5B (+59% YoY)
  • Total Cash Returned: $6.5B (+13% YoY)

Balance Sheet (Dec 31, 2025):

  • Cash & Short-term Investments: $4.9B
  • Total Debt: $14.0B
  • Inventory: $4.8B (218 days)

Q&A Highlights

Why is Q1 guidance above seasonal? This marks the first time in approximately 15 years that TI has guided sequential Q1 revenue up . CEO Haviv Ilan attributed it to:

  • Orders improved throughout Q4 and backlog built consistently
  • "Turns" business (same-day order requests) running at elevated levels
  • Data center continuing to grow and now material to revenue

On pricing: Management confirmed pricing is not driving the above-seasonal guide . TI expects low single-digit price declines (~2-3%) in 2026, consistent with 2025 . No step-function price increases planned—Q1 typically sees slight price pressure from annual contract negotiations .

On industrial recovery: Industrial remains ~25% below 2022 peaks despite recovering . Management sees "a lot of room to go" for secular growth to establish new highs .

On automotive: Automotive revenue has returned to Q3 2023 peak levels . China automotive typically weak in Q1 due to Chinese New Year. Secular content growth continues across ICE and EV platforms .

On memory shortages: Management acknowledged noise around memory shortages could be driving some customer ordering activity, though they couldn't confirm causation .

On inventory: TI is "very pleased" with its $4.8B inventory position, calling it an asset that enables quick customer response . Lead times remain competitive at below 13 weeks on average, with many parts at 6 weeks .

How Did the Stock React?

TXN shares rallied on the guidance surprise:

MetricValue
Regular Session Close$196.63
After-Hours Price$206.99
After-Hours Change+5.3%
52-Week High$221.69
52-Week Low$139.95
Market Cap$179B

The positive reaction contrasts sharply with Q3 2025 earnings, when shares fell ~7% after-hours on weaker-than-expected Q4 guidance . The better Q1 2026 outlook appears to signal that the semiconductor recovery is gaining momentum.

Manufacturing & Capacity Update

Sherman Fab (Texas): Ramping ahead of schedule with high yields . New equipment enabling higher throughput than originally planned. Production lines running in Sherman 1 clean room, with Sherman 2 shell available for future expansion .

Lehi Fab (Utah): Insourcing progress from foundry wafers continues . 65-nanometer transition completed in 2025 with yields matching foundry levels. 45-nanometer technology (primarily automotive radar) progressing well .

2026 Capital Guidance:

  • CapEx: $2.0B-$3.0B (consistent with prior guidance)
  • Depreciation: $2.2B-$2.4B (new disclosure)
  • Investment Tax Credit (ITC): Now 35% as of January 1, 2026 for all new CapEx
  • Direct CHIPS Act funding: Up to $1.6B remaining to be received as milestones are achieved
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Forward Catalysts

Near-Term:

  • Capital Management Call: February 24, 2026 at 10:00 AM Central — Management will share approach to capital allocation and progress on manufacturing investments
  • Q1 2026 earnings (expected late April 2026)
  • Data center now broken out as separate end market—watch for continued growth trajectory

Structural:

  • Sherman, Texas fab ramp continues—TI's largest 300mm manufacturing investment
  • CHIPS Act incentives providing cash flow tailwind ($670M benefit in 2025)
  • Industrial and automotive end market recovery trajectory
  • Data center AI infrastructure spending

Key Risks

  1. Order Sustainability: Management cautioned the recent pickup in orders needs to prove sustainable—the market has been "jittery" over the last 12 months
  2. China Exposure: China revenue down 7% sequentially in Q4, up 16% YoY . Typically weak Q1 due to Chinese New Year
  3. Depreciation Headwind: 2026 depreciation expected $2.2B-$2.4B , with upward pressure continuing into 2027 (though at slower rate)
  4. Competitive Pricing: Low single-digit price declines (~2-3%) expected in 2026
  5. Personal Electronics Weakness: Q4 PE revenue declined due to China subsidy expiration for TVs/appliances

Updated January 27, 2026 with earnings call transcript details.

Related: TXN Company Profile | Q4 2025 Earnings Transcript | Q3 2025 Earnings