Key Points
Texas Instruments (Nasdaq: TXN) grew third-quarter revenue 28% to $6.06 billion, beating the $5.92 billion estimate, and earned $2.62 a share versus $2.42 expected.
TI's data center business grew about 95% from a year ago, and industrial grew more than 40%. Every end market and region grew.
Gross margin jumped to 64%, up from about 57% a year ago, and operating profit rose 73% to $2.87 billion.
TI guided fourth-quarter revenue to $5.80–$6.30 billion. That midpoint is roughly flat with Q3, in a quarter that normally declines, and it's above the ~$5.75 billion analysts expected.
The stock still closed Wednesday at $284.65, about 15% below its June 22 record of $334.03. It then slipped on Thursday as chip stocks sold off.
Texas Instruments just told Wall Street that the most boring corner of the chip industry is booming.
On Wednesday night, the maker of the unglamorous chips inside almost everything — power regulators, sensors, microcontrollers — reported revenue up 28%, a data center business that nearly doubled, and fourth-quarter guidance above estimates.
And the stock went nowhere. Shares had already climbed 2.47% during Wednesday's regular session to close at $284.65, ticked up briefly after hours, and then slipped on Thursday as the semiconductor group sold off around it.
One of the cleanest beats of earnings season, and a stock still about 15% below its June record.
The Quarter Was Better Than "Good"
Here's what TI reported:
Revenue: $6.06 billion, up 28% from $4.74 billion a year ago and up 11% from the second quarter. Analysts expected $5.92 billion.
Earnings per share: $2.62, versus a $2.42 consensus.
Operating profit: $2.87 billion, up 73%.
Gross profit: $3.89 billion on $6.06 billion of revenue, a 64% gross margin, up from roughly 57% a year earlier.
That margin jump matters most. TI poured billions into new 300-millimeter factories in Texas and Utah, and bears said those costs would crush profitability for years. Instead, the payoff is arriving now, driven by higher volumes, better pricing and a richer mix.
CEO Haviv Ilan put it plainly on the call: "During the quarter, we saw broad demand, with revenue growth across all end markets and regions."
The AI Money Is Flowing Into Analog
The headline number is data center revenue, up about 95% year over year and about 20% from the prior quarter.
Every AI server rack needs power-management chips, sensors and control processors to keep it running. Ilan told analysts TI now sells about 10,000 different generic part numbers into data centers, and that number grows every quarter. Customers need telemetry, cooling, efficiency and power density — all TI territory.
It's the same theme we laid out recently: the next winners in AI may not be the chipmakers everyone is watching.
And it isn't only AI. Industrial revenue rose more than 40%, and automotive grew in the mid-teens. TI said auto customers kept so little inventory on hand that they were caught short when demand picked up. "I do not see any inventory build up," Ilan said. "On the contrary, I wish they had a little bit more."
So Why Didn't the Stock Rally?
Three reasons, and none of them are about this quarter.
First, the stock had already run hard. TI started 2026 at about $177. Wednesday's close at $284.65 was a gain of more than 60% this year, including a 19% one-day jump after April's report. A lot of good news was already in the price.
Second, the market is asking whether margins have peaked. Part of the margin gain came from pricing and mix, and TI acknowledged those tailwinds may not hold at the same level. When a cyclical company posts its best margin rebound in more than a decade, investors start asking how much better it can get.
Third, TI can't ship as fast as customers want. The company said lead times are stretching, especially for back-end assembly and test equipment, and that outside assembly partners aren't giving it as much capacity as it wanted. TI is ramping a new site in Malaysia, now its largest assembly and test facility, but Ilan admitted you "cannot flip a switch" to get the right output immediately.
The backdrop didn't help. Chip stocks fell Thursday despite solid results from TI and Lam Research. It's a pattern we've seen all season: companies beat everything and the market grounds them anyway.
The Signal Under the Surface
TI is the world's biggest analog chipmaker, so its results are a read on the whole industrial economy. Its fourth-quarter guidance calls for roughly flat revenue at the midpoint, in a quarter that usually shrinks.
UBS made a similar case days before the report. Its October 16 surveys found that analog distributor inventory fell 7% to 10% from the prior quarter, while prices rose 9% to 12%. Its analysts said restocking hasn't even started yet. That's what the early innings of an upcycle look like: tight supply, rising prices and customers who are still underbuilt.
Meanwhile, the cash machine is turning back on. TI generated $9.9 billion in operating cash flow over the past 12 months and $8.4 billion in free cash flow, now that the heaviest factory spending is behind it. Over that stretch it returned $5.8 billion to shareholders. In September, it raised its dividend for the 23rd straight year.
What Lands Next
Next week puts the analog recovery and the AI trade on the same stage:
Tuesday, Oct. 27: NXP Semiconductors reports after the close. It's the next big read on autos and industrial chips. Seagate also reports.
Wednesday, Oct. 28: The Fed announces its rate decision at 2 p.m. ET, followed by Chair Warsh's press conference. After the close, Microsoft and Alphabet report,.
Thursday, Oct. 29: Third-quarter GDP and the PCE inflation data arrive at 8:30 a.m. ET. Amazon and Intel report after the close.
Monday, Nov. 2: onsemi and Apple report.
Thursday, Nov. 5: Microchip reports, completing the analog picture.
If NXP and Microchip confirm what TI just described — lean inventories, rising prices, demand across every market — then Wednesday's report won't look like a peak. It will look like the start of the cycle.
Either way, the AI boom is spreading beyond the biggest chip names, and Texas Instruments just posted proof.
This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.
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