Texas Instruments Inc (NASDAQ:TXN) forecast first-quarter revenue above Wall Street estimates on Wednesday, signaling a recovery in analog chip demand after a prolonged downturn, as strong cash generation offset a slight year-on-year dip in profit.
The analog semiconductor maker said it expects first-quarter revenue of $4.32 billion to $4.68 billion, compared with analysts’ average estimate of $4.42 billion, pointing to stronger-than-seasonal demand across its core end markets.
Shares of Texas Instruments rose about 5.5% in premarket trading.
For the fourth quarter, the company reported revenue of $4.42 billion, roughly in line with expectations and up 10% from a year earlier, supported by improving sequential momentum. Net income declined slightly year-on-year as depreciation continued to rise following several years of elevated capital spending.
Gross margin held steady at 56%, while operating margin remained near 34%, reflecting the resilience of Texas Instruments’ analog-heavy business model despite ongoing pricing pressure across the chip industry.
Free cash flow stood out as a key positive. Fourth-quarter free cash flow totaled $1.33 billion, well above estimates of $884.7 million, representing a margin of about 30%. The company said cash generation benefited from higher factory utilization, disciplined operating expenses and inventory positioned to support short-cycle demand. Full-year free cash flow nearly doubled, highlighting the payoff from investments in 300-millimeter wafer manufacturing.
Analog revenue rose 14% year-on-year, with earnings before interest and tax up 13%, while the embedded processing segment posted 22% EBIT growth with expanding margins. Industrial, automotive and data center customers now account for roughly three-quarters of total revenue.
Texas Instruments said data center revenue, now disclosed as a separate end market, increased 70% year-on-year, driven by rising analog content per system.
Inventory remained elevated at 222 days, which the company described as a timing issue rather than a sign of demand destruction. Management reiterated expectations for low single-digit price declines in 2026.
Looking ahead, the company expects capital spending to moderate to $2 billion to $3 billion in 2026, with depreciation growth set to slow as utilization improves.