It has been about a month since the last earnings report for Texas Instruments (TXN). Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Texas Instruments due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
Texas Instruments Q4 Earnings Miss Estimates, Revenues Rise Y/Y
Texas Instruments reported fourth-quarter 2025 earnings per share of $1.27, which missed the Zacks Consensus Estimate by 2.3% and came above the midpoint of management’s guidance of $1.13 to $1.39. The bottom line decreased 2% year over year.
Texas Instruments reported revenues of $4.42 billion, which missed the Zacks Consensus Estimate by 0.3%. The figure came above the midpoint of management’s guidance of $4.22-$4.58 billion. The top line rose 10% year over year.
Texas Instruments’ Q4 Top-Line Details
Segment-wise, Texas Instruments operates under three business divisions: Analog, Embedded Processing and Other.
Analog: Revenues of $3.62 billion were generated from the segment (81.7% of total revenues), up 14% from the year-ago quarter’s level. The figure came above our model estimate of $3.53 billion.
Embedded Processing: Revenues amounted to $662 million (15% of total revenues), up 8% year over year. The figure surpassed our model estimate of $618.7 million.
Other: Revenues totalled $146 million (3.3% of total revenues), down 34% from the prior-year quarter’s level. The figure missed our model estimate of $276.1 million.
Texas Instruments’ Operating Details
Texas Instruments’ gross profit increased 7% year over year to $2.47 billion. Gross margin of 55.9% contracted 190 bps year over year.
Selling, general and administrative (SG&A) expenses remained flat year over year at $446 million. As a percentage of revenues, SG&A expenses contracted 100 basis points (bps) year over year to 10.1%.
Research and development expenses grew 6.1% to $521 million. As a percentage of revenues, it decreased 160 bps to 11.8%.
Operating profit rose 7% year over year to $1.47 billion. The operating margin was 33.3%, which contracted 110 bps from the prior-year quarter’s number.
TXN’s Balance Sheet & Cash Flow
As of Dec. 31, 2025, the cash and short-term investment balance was $4.88 billion, down from $5.19 billion as of Sept. 30, 2025.
At the end of the reported quarter, TXN’s long-term debt was $13.548 billion, up marginally from $13.546 billion in the previous quarter.
Texas Instruments generated an operating cash flow of approximately $2.25 billion in the fourth quarter. During the fourth quarter, it repurchased stocks worth $403 million and paid $1.29 billion in dividends.
In 2025, the company generated an operating cash flow of $7.15 billion and returned approximately $6.48 billion through share repurchases and dividend payments.
TXN Initiates Guidance for Q1 2026
For the first quarter of 2026, TXN expects revenues between $4.32 billion and $4.68 billion.
The company expects earnings per share between $1.22 and $1.48.
The company expects the effective tax rate to be in the band of 13-14%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 6.05% due to these changes.
VGM Scores
Currently, Texas Instruments has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of B. 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. Interestingly, 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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