NXP Rises 23% in a Month: Should Investors Hold on to the Stock?

NXP Semiconductors NXPI shares have gained 7.4% since reporting first-quarter 2025 results on April 28, highlighting the company's resilience in managing profitability amid declining revenues and challenging market conditions. Strategic investments in AI and innovation, coupled with platform enhancements, position NXPI to navigate the evolving semiconductor landscape in the long term.

However, the revenue decline across all key segments in first quarter 2025 reflects persistent demand challenges. The cautious outlook for the second quarter, along with global economic headwinds, warrants close monitoring in the quarters ahead.

Despite  23.4% in the past month, NXPI has underperformed the Zacks Semiconductor - Analog and Mixed industry and its peers, including Microchip Technology MCHP, Magnachip Semiconductor MX and Analog Devices ADI. Microchip Technology, Magnachip Semiconductor, and Analog Devices have posted returns of 57.7%, 36.5%, and 28.8%, respectively, while the industry has gained 32.5% over the same period.

NXPI Struggles as Key Business Segments Lose Momentum

NXP's recent performance in the first quarter underscores persistent demand challenges across its core markets. The company reported a 9.3% year-over-year revenue decline to $2.84 billion. This contraction highlights not only the broader softness within the semiconductor industry but also signals notable weakness across NXPI’s key business segments—Automotive, Industrial & IoT, Mobile, and Communication Infrastructure.

NXP Semiconductors N.V. Price and Consensus

 

NXP Semiconductors N.V. price-consensus-chart | NXP Semiconductors N.V. Quote

In the first quarter of 2025, NXP’s Automotive segment posted a 7% year-over-year revenue decline, whereas the Industrial & IoT segment contracted 11%. The Mobile business saw a modest 3% dip, and the Communication Infrastructure segment faced a 21% year-over-year drop. Notably, all four segments also declined on a sequential basis, signaling persistent demand weakness and limited near-term recovery momentum across NXP’s end markets.

NXP Provides Cautious Q2 Guidance

NXPI provided cautious guidance for the second quarter of 2025, projecting revenues of $2.8-$3 billion, indicating a 7% year-over-year decline at the mid-point.
    
The Zacks Consensus Estimate for second-quarter revenues is pegged at $2.90 billion, suggesting a year-over-year decline of 7.25%.

NXPI anticipates non-GAAP earnings per share of $2.46-$2.86. The consensus mark for the same is pinned at $2.67 per share, unchanged over the past 30 days, suggesting a 16.56% year-over-year decline.

Acquisitions & Partnerships Drive NXPI’s Growth

The company acquired Kinara Inc., an artificial intelligence firm, for $307 million. This acquisition is expected to bolster NXP's capabilities in AI and edge computing, aligning with its strategic focus on growth areas. The deal, pending regulatory approval by the end of the second quarter, is expected to strengthen NXP’s position in the industrial and IoT markets.

NXPI announced the acquisition of TTTech Auto, a Vienna-based company specializing in safety-critical systems and middleware for software-defined vehicles (SDVs), for $625 million. This move aims to enhance NXP's CoreRide platform, facilitating automakers in reducing complexity and accelerating time-to-market for SDVs.

NXP expanded its partnership with Honeywell to develop AI-driven technologies for aviation, focusing on autonomous flight systems. The collaboration integrates Honeywell's Anthem cockpit with NXP's computing architecture, aiming to advance smart building technologies, including energy-efficient and secure building management systems.

NXPI is pushing the boundaries of automotive technology with its new S32K5 MCU family, the first in the industry to use 16nm FinFET technology with embedded magnetic RAM. This innovation supports the CoreRide platform by delivering pre-integrated zonal and electrification systems, enabling next-generation SDV design.

Conclusion

NXPI is advancing its priorities through targeted acquisitions, product innovation and expanding partnerships, particularly in AI, edge computing and software-defined vehicles. However, the company continues to face broad-based revenue declines across all segments, reflecting persistent demand challenges, macroeconomic uncertainty, and sector-specific headwinds.

With a cautious outlook for the coming quarter and sequential softness in key businesses, investors may consider waiting for clearer signs of stability before entering the stock.

NXP currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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