Analog chip manufacturer Texas Instruments (NASDAQ: TXN) fell short of the markets revenue expectations in Q4 CY2025, but sales rose 10.4% year on year to $4.42 billion. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $4.5 billion at the midpoint, or 1.7% above analysts’ estimates. Its GAAP profit of $1.27 per share was 2.9% below analysts’ consensus estimates.
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Texas Instruments (TXN) Q4 CY2025 Highlights:
- Revenue: $4.42 billion vs analyst estimates of $4.46 billion (10.4% year-on-year growth, 0.8% miss)
- EPS (GAAP): $1.27 vs analyst expectations of $1.31 (2.9% miss)
- Adjusted EBITDA: $2.09 billion vs analyst estimates of $2.05 billion (47.3% margin, 1.9% beat)
- Revenue Guidance for Q1 CY2026 is $4.5 billion at the midpoint, above analyst estimates of $4.42 billion
- EPS (GAAP) guidance for Q1 CY2026 is $1.35 at the midpoint, beating analyst estimates by 5.6%
- Operating Margin: 33.3%, down from 34.4% in the same quarter last year
- Free Cash Flow Margin: 30%, up from 20.1% in the same quarter last year
- Inventory Days Outstanding: 224, up from 218 in the previous quarter
- Market Capitalization: $178.6 billion
Company Overview
Headquartered in Dallas, Texas since the 1950s, Texas Instruments (NASDAQ: TXN) is the world’s largest producer of analog semiconductors.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Texas Instruments’s sales grew at a mediocre 4.1% compounded annual growth rate over the last five years. This fell short of our benchmark for the semiconductor sector and is a tough starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Texas Instruments’s recent performance shows its demand has slowed as its revenue was flat over the last two years. 
This quarter, Texas Instruments’s revenue grew by 10.4% year on year to $4.42 billion but fell short of Wall Street’s estimates. Beyond the miss, this marks 4 straight quarters of growth, implying that Texas Instruments is in the middle of its cycle - a typical upcycle generally lasts 8-10 quarters. Company management is currently guiding for a 10.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 8.4% over the next 12 months. While this projection suggests its newer products and services will fuel better top-line performance, it is still below the sector average.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Texas Instruments’s DIO came in at 224, which is 39 days above its five-year average, suggesting that the company’s inventory has grown to higher levels than we’ve seen in the past.
Key Takeaways from Texas Instruments’s Q4 Results
It was encouraging to see Texas Instruments’s revenue guidance for next quarter beat analysts’ expectations. On the other hand, its EPS missed and its revenue fell slightly short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded up 4.2% to $206.27 immediately after reporting.
Should you buy the stock or not? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
