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The earnings call summary and Q&A indicate a generally positive outlook. The company reported strong free cash flow growth, increased dividends, and stock repurchases. Q1 guidance is above seasonal expectations, driven by industrial market recovery and data center strength. Despite some caution about sustainability in China and the industrial market, overall sentiment is positive with strong financial metrics and optimistic guidance.
Revenue $4.4 billion in Q4 2025, a decrease of 7% sequentially and an increase of 10% year-over-year. The increase is attributed to the overall semiconductor market recovery.
Analog Revenue Grew 14% year-over-year in Q4 2025. The growth is due to increased demand in the semiconductor market.
Embedded Processing Revenue Grew 8% year-over-year in Q4 2025. The growth is due to increased demand in the semiconductor market.
Other Segment Revenue Declined year-over-year in Q4 2025. No specific reason provided.
Industrial Market Revenue Up high teens year-over-year in Q4 2025, with recovery continuing broadly across sectors. Sequentially, it was down mid-single digits.
Automotive Market Revenue Increased upper single digits year-over-year in Q4 2025 and was down low single digits sequentially.
Data Center Revenue Grew around 70% year-over-year in Q4 2025 and mid-single digits sequentially. The growth is attributed to increased demand in data center compute, networking, and thermal management.
Personal Electronics Revenue Declined upper teens year-over-year and mid-teens sequentially in Q4 2025. No specific reason provided.
Communications Equipment Revenue Declined low single digits year-over-year and mid-teens sequentially in Q4 2025. No specific reason provided.
Gross Profit $2.5 billion in Q4 2025, 56% of revenue. Sequentially, gross profit margin decreased by 150 basis points.
Operating Expenses $967 million in Q4 2025, up 3% year-over-year. This was as expected.
Operating Profit $1.5 billion in Q4 2025, 33% of revenue, up 7% year-over-year.
Net Income $1.2 billion in Q4 2025, or $1.27 per share. Earnings per share included a $0.06 reduction due to noncash impairment of goodwill in the Other segment and other tax-related items.
Cash Flow from Operations $2.3 billion in Q4 2025.
Capital Expenditures $925 million in Q4 2025.
Dividends Paid $1.3 billion in Q4 2025. Dividend per share increased by 4% to $1.42 per share.
Stock Repurchases $403 million in Q4 2025.
Free Cash Flow $2.9 billion in 2025, 17% of revenue, representing an increase of 96% from 2024. The growth reflects investments in 300-millimeter manufacturing assets and inventory.
CHIPS Act Incentives $670 million cash benefit received in 2025.
Inventory $4.8 billion at the end of Q4 2025, down $25 million from the prior quarter. Days of inventory were 222, up 7 days sequentially.
Analog revenue: Grew 14% year-over-year in Q4 2025.
Embedded Processing revenue: Grew 8% year-over-year in Q4 2025.
Data center market revenue: Grew 70% year-over-year and mid-single digits sequentially in Q4 2025.
Industrial market: Revenue was $5.8 billion in 2025, up 12% year-on-year and accounted for 33% of total revenue.
Automotive market: Revenue was $5.8 billion in 2025, up 6% year-on-year and accounted for 33% of total revenue.
Data center market: Revenue was $1.5 billion in 2025, up 64% year-on-year and accounted for 9% of total revenue.
Gross profit margin: 56% of revenue in Q4 2025, decreased 150 basis points sequentially.
Operating expenses: $967 million in Q4 2025, up 3% year-on-year.
Free cash flow: $2.9 billion in 2025, representing an increase of 96% from 2024.
End market reorganization: Reorganized end markets to include data center, reflecting growth opportunities in Analog and Embedded products.
Capacity expansion: Continued progress on 300-millimeter manufacturing capacity expansion, nearing the end of a 6-year elevated CapEx cycle.
Sequential Revenue Decline: Revenue decreased by 7% sequentially in the fourth quarter, indicating potential challenges in maintaining consistent growth.
Gross Profit Margin Decline: Gross profit margin decreased by 150 basis points sequentially, which could signal cost pressures or pricing challenges.
Goodwill Impairment: Earnings per share included a $0.06 reduction due to a noncash impairment of goodwill in the Other segment, reflecting potential underperformance in this area.
Inventory Levels: Inventory days increased to 222, up 7 days sequentially, which may indicate slower inventory turnover or potential demand issues.
Capital Expenditures: Capital expenditures were $4.6 billion in 2025, reflecting ongoing investments in capacity expansions, which could strain cash flow if not matched by revenue growth.
Debt Levels: Total debt outstanding was $14 billion with a weighted average coupon of 4%, which could pose financial risks if interest rates rise or cash flow decreases.
Revenue Expectations: TI expects first quarter 2026 revenue to be in the range of $4.32 billion to $4.68 billion.
Earnings Per Share (EPS): TI projects earnings per share for the first quarter of 2026 to be in the range of $1.22 to $1.48.
Tax Rate: The effective tax rate for 2026 is expected to be about 13% to 14%.
Capital Expenditures: TI is nearing the end of a 6-year elevated CapEx cycle, positioning the company to deliver dependable low-cost 300-millimeter capacity at scale.
Market Trends and Growth: TI anticipates continued growth in industrial, automotive, and data center markets, driven by increasing chip content per application and secular content growth.
Dividend Payment: In the fourth quarter, Texas Instruments paid $1.3 billion in dividends.
Dividend Increase: The company increased its dividend per share by 4% in the fourth quarter to $1.42 per share.
Dividend History: This marks the 22nd consecutive year of dividend increases by Texas Instruments.
Share Repurchase: Texas Instruments repurchased $403 million of its stock in the fourth quarter.
Total Shareholder Return: In the past 12 months, the company has returned $6.5 billion to shareholders through dividends and share repurchases.
The earnings call summary and Q&A indicate a generally positive outlook. The company reported strong free cash flow growth, increased dividends, and stock repurchases. Q1 guidance is above seasonal expectations, driven by industrial market recovery and data center strength. Despite some caution about sustainability in China and the industrial market, overall sentiment is positive with strong financial metrics and optimistic guidance.
The earnings call reveals a stable quarter with mixed signals. Strong automotive and data center growth offsets slowing industrial growth. EPS guidance is weak, but restructuring and strategic R&D investments suggest long-term potential. The Q&A highlights management's reluctance to give detailed guidance, raising uncertainty. Overall, the stock is likely to remain neutral, with no significant positive or negative catalysts.
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