Texas Instruments forecast fourth-quarter revenue above Wall Street estimates on Wednesday, October 21, after third-quarter sales jumped 28 percent, in a sign that industrial chip demand is recovering and that its business supplying AI data centers is gaining momentum.
The Dallas, Texas-based chipmaker expects fourth-quarter revenue between 5.80 billion dollars and 6.30 billion dollars, above the analysts' average estimate of 5.73 billion dollars, according to data compiled by LSEG. It expects quarterly profit between 2.45 dollars and 2.79 dollars per share.
Third-quarter revenue rose 28 percent from a year earlier to 6.06 billion dollars, topping estimates of 5.92 billion dollars, and rose 11 percent from the previous quarter. Quarterly profit rose 77 percent to 2.62 dollars per share, net income climbed 78 percent to 2.43 billion dollars, and operating profit rose 73 percent to 2.87 billion dollars.
Unlike Nvidia, which makes high-performance AI processors, Texas Instruments produces analog chips that manage power and convert real-world inputs such as sound, light and temperature into digital signals for other semiconductors to process. Its analog and embedded chips are used in smartphones, laptops, cars and factory equipment, and its power management components play a key role inside servers and networking equipment.
That breadth showed up in the segment results. Analog revenue, the company's largest business, rose 32 percent from a year earlier to 4.91 billion dollars. Embedded Processing revenue rose 21 percent to 858 million dollars, while the company's other segment declined 6 percent to 286 million dollars. Gross margin reached 64 percent, up 280 basis points from the previous quarter, helped by higher revenue, pricing and product mix.
Demand grew across end markets. Industrial revenue increased more than 40 percent from a year earlier, reaching a new peak after four years. Automotive revenue rose in the mid-teens, supported by demand in the United States and China. Data center revenue grew approximately 95 percent from a year earlier and about 20 percent from the previous quarter, and now represents about 13 percent of total company revenue. Personal electronics was about flat from a year earlier, and communications equipment grew both year on year and sequentially.
Texas Instruments is one of the first major chipmakers to post quarterly results and is widely considered a bellwether for the broader electronics and semiconductor industries, because its parts go into such a wide range of products. A recovery led by industrial orders, its largest end market, alongside near-doubling data center revenue, suggests the upturn is broader than the AI buildout alone.
The company's cash generation remained strong. Cash flow from operations reached 9.9 billion dollars over the trailing 12 months, and free cash flow over the same period was 8.42 billion dollars. "Our cash flow from operations of 9.9 billion dollars for the trailing 12 months again underscored the strength of our business model, the quality of our product portfolio and the benefit of 300mm production," chief executive Haviv Ilan said.
For enterprise buyers and equipment makers, the results point to a chip supplier investing through the recovery and ramping its factories to support the growth, with demand now coming simultaneously from factories, vehicles and the data centers at the center of the AI buildout.