It has been about a month since the last earnings report for Texas Instruments (TXN). Shares have added about 7.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Texas Instruments due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Texas Instruments Incorporated before we dive into how investors and analysts have reacted as of late.
Texas Instruments Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Texas Instruments reported better-than-expected second-quarter 2025 results. The company reported second-quarter earnings per share of $1.41, which beat the Zacks Consensus Estimate by 6.82% and came above the midpoint of management’s guidance of $1.21 to $1.47. The quarterly earnings increased 15.6% year over year.
TXN’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 11.23%.
Texas Instruments reported revenues of $4.45 billion, which beat the Zacks Consensus Estimate by 3.23%. The figure came above the midpoint of management’s guidance of $4.17-$4.53 billion. The top line rose 16% year over year.
Texas Instruments’ Q2 Top-Line Details
Segment-wise, Texas Instruments operates under three business divisions: Analog, Embedded Processing and Other.
Analog: Revenues of $3.45 billion were generated from the segment (77.6% of total revenues), up 18% from the year-ago quarter’s level. The figure came above our model estimate of $3.34 billion.
Embedded Processing: Revenues amounted to $679 million (15.3% of total revenues), up 10.4% year over year. The figure surpassed our model estimate of $662.5 million.
Other: Revenues totaled $317 million (7.1% of total revenues), up 13.6% from the prior-year quarter’s level. The figure surpassed our model estimate of $280.9 million.
Texas Instruments’ Operating Details
Texas Instruments’ gross profit increased 16% year over year to $2.58 billion. Gross margin of 58% remained flat year over year.
Selling, general and administrative (SG&A) expenses grew 4.3% year over year to $485 million. As a percentage of revenues, SG&A expenses contracted 130 bps year over year to 10.9%.
Research and development (R&D) expenses grew 5.8% to $527 million. As a percentage of revenues, it decreased 160 basis points to 11.8%.
Operating profit rose 25.2% year over year to $1.56 billion. The operating margin was 35.1%, which expanded 250 bps from the prior-year quarter’s number.
TXN’s Balance Sheet & Cash Flow
As of June 30, 2025, the cash and short-term investment balance was $5.36 billion, up from $5 billion as of March 31, 2025.
At the end of the reported quarter, TXN’s long-term debt was $14.04 billion, up from $12.85 billion in the previous quarter.
Texas Instruments generated an operating cash flow of approximately $1.86 billion in the second quarter. During the second quarter, it repurchased stocks worth $302 million and paid $1.24 billion in dividends.
In the first half of 2025, the company generated an operating cash flow of $2.71 billion and returned approximately $3.44 billion through share repurchases and dividend payments.
TXN Initiates Guidance for Q3 2025
For the third quarter of 2025, TXN expects revenues between $4.45 billion and $4.80 billion. The company expects earnings per share between $1.36 and $1.60. It expects the effective tax rate to be approximately 12-13%.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in fresh estimates.
VGM Scores
At this time, Texas Instruments has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock has a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Texas Instruments has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Texas Instruments Incorporated (TXN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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