Texas Instruments Stock Slips Pre-Market As Weak Profit Guidance Dents Market Optimism: Retail Sentiment Stays Bullish

Texas Instruments Inc. (TXN) dropped nearly 5% in pre-market trading on Friday after the chipmaker reported stronger-than-expected fourth-quarter earnings but issued weak profit guidance for the first quarter.

For the December quarter, the company posted earnings per share of $1.30, surpassing Wall Street estimates of $1.21, according to Koyfin. Revenue for the period came in at $4.01 billion, exceeding analyst expectations of $3.9 billion.

"In 2024, industrial and automotive markets represented 70% of Texas Instruments’ revenue, up from 42% in 2013," CEO Haviv Ilan noted in the earnings call. "We see good opportunities in all of our markets but continue to place additional strategic emphasis on industrial and automotive."

However, the company provided a cautious revenue forecast for the current quarter, projecting between $3.74 billion and $4.06 billion. At the midpoint, the range aligns with consensus estimates of $3.85 billion, according to Koyfin. 

Earnings-per-share guidance, however, fell short, with a range of $0.94 to $1.16, compared to the consensus estimate of $1.16.

Ilan acknowledged continued weakness in the automotive end markets in Europe, the U.S., and Japan, despite some growth in China. "China did grow, but not enough to offset the declines in Europe, the U.S., and Japan," he said.

“And here, we haven't seen the bottom yet. Let's be very clear about that. We're seeing point points of strength. I've given China as an example. But we'll have to see how the year plays out,” he added.

 

Texas Instruments Inc. Sentiment and Message Volume on Jan.24 as of 7:50 a.m. ET | Source: Stocktwits

Despite the market’s reaction to the weaker outlook, retail sentiment on Stocktwits edged higher into the ‘bullish’ zone as chatter increased to ‘extremely high’ levels from ‘normal’ six months ago. 

According to Stocktwits data, message volume on the ticker saw an over 1000% jump in the 24 hours ahead of the earnings.

Some users on the platform suggested that the market was overreacting to earnings that passed expectations.

Another predicted the stock would recover to close the day above $200.

Over the last 12 months, Texas Instruments' stock has gained 15%, compared with the 16% increase in the iShares Semiconductor ETF. 

The company is the first major semiconductor player to release results for the December quarter, setting the stage for other industry leaders.

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