Texas Instruments (TXN) reported better-than-expected third-quarter 2025 results. The company reported third-quarter earnings per share of $1.48, which beat the Zacks Consensus Estimate by 0.7% and came at the midpoint of management’s guidance of $1.36 to $1.60. The quarterly earnings increased 1% year over year.
TXN’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 9.4%.
Texas Instruments reported revenues of $4.74 billion, which beat the Zacks Consensus Estimate by 2.1%. The figure came above the midpoint of management’s guidance of $4.45-$4.80 billion. The top line rose 14% year over year.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Texas Instruments Incorporated price-consensus-eps-surprise-chart | Texas Instruments Incorporated Quote
Texas Instruments’ Q3 Top-Line Details
Segment-wise, Texas Instruments operates under three business divisions: Analog, Embedded Processing and Other.
Analog: Revenues of $3.73 billion were generated from the segment (78.6% of total revenues), up 16% from the year-ago quarter’s level. The figure came above our model estimate of $3.63 billion.
Embedded Processing: Revenues amounted to $709 million (15% of total revenues), up 9% year over year. The figure surpassed our model estimate of $706.1 million.
Other: Revenues totalled $304 million (6.4% of total revenues), up 11% from the prior-year quarter’s level. The figure surpassed our model estimate of $301.6 million.
Texas Instruments’ Operating Details
Texas Instruments’ gross profit increased 10% year over year to $2.72 billion. Gross margin of 57.4% contracted 220 bps year over year.
Selling, general and administrative (SG&A) expenses grew 6.8% year over year to $457 million. As a percentage of revenues, SG&A expenses contracted 70 bps year over year to 9.6%.
Research and development (R&D) expenses grew 5.3% to $518 million. As a percentage of revenues, it decreased 160 basis points to 10.9%.
Operating profit rose 7% year over year to $1.66 billion. The operating margin was 35.1%, which contracted 240 bps from the prior-year quarter’s number.
TXN’s Balance Sheet & Cash Flow
As of Sept. 30, 2025, the cash and short-term investment balance was $5.19 billion, down from $5.36 billion as of June 30, 2025.
At the end of the reported quarter, TXN’s long-term debt was $13.55 billion, down from $14.04 billion in the previous quarter.
Texas Instruments generated an operating cash flow of approximately $2.19 billion in the third quarter. During the third quarter, it repurchased stocks worth $119 million and paid $1.24 billion in dividends.
In the first three quarters of 2025, the company generated an operating cash flow of $4.89 billion and returned approximately $4.78 billion through share repurchases and dividend payments.
TXN Initiates Guidance for Q4 2025
For the fourth quarter of 2025, TXN expects revenues between $4.22 billion and $4.58 billion. The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $4.51 billion, indicating an increase of 12.6% from the year-ago quarter.
The company expects earnings per share between $1.13 and $1.39. The consensus mark for the same is pegged at $1.40 per share, indicating an increase of 7.7% from the year-ago quarter.
The company expects the effective tax rate to be approximately 13-14%.
Zacks Rank and Stocks to Consider
Currently, TXN carries a Zacks Rank #3 (Hold).
Some better-ranked stocks that investors can consider in the semiconductor space are Analog Devices (ADI), Lam Research (LRCX) and NVIDIA (NVDA), each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Lam Research’s shares have rallied 100.7% year to date. The Zacks Consensus Estimate for Lam Research’s full-year fiscal 2026 earnings is pegged at $4.53 per share, up 2% over the past 30 days, indicating an increase of 9.4% from the year-ago quarter’s reported figure.
Analog Devices’ shares have gained 13.4% year to date. The Zacks Consensus Estimate for Analog Devices’ full-year fiscal 2025 earnings is pegged at $7.75 per share, up 1.2% over the past 60 days, indicating an increase of 16.2% from the year-ago quarter’s reported figure.
NVIDIA shares have gained 34.8% year to date. The Zacks Consensus Estimate for NVIDIA’s full-year fiscal 2026 earnings is pegged at $4.45 per share, up 4.2% over the past 60 days, indicating a rise of 48.8% from the year-ago quarter’s reported figure.
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Analog Devices, Inc. (ADI) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).