Texas Instruments (TXN) is falling 5% in early trading after the chip maker provided first-quarter earnings per share guidance that came in well below analysts' average estimate.

The company reported its Q4 results yesterday after the market closed.

A technician in a lab coat soldering chipsets to power the company's infotainment head units.

TXN's EPS Guidance Shortfall and Comments

For Q1, the company expects earnings per share of 94 cents to $1.16. Analysts, on average expected it to generate EPS of $1.17. TXN provided Q1 sales guidance of $3.74 billion to $4.06 billion. The midpoint of that range is $3.90 billion, which is exactly in line with analysts' mean outlook.

CEO Haviv Ilan reported that the company was hurt by continued weakness in the "industrial automation and energy infrastructure" sectors, along with demand deceleration by Chinese automakers.

Morgan Stanley Is "Underwhelmed" by TXN

Due to the company's Q1 guidance, Morgan Stanley stated that it was "underwhelmed" by TXN's outlook. The investment bank believes that the chip maker may have trouble meeting its 2026 goals of $20 billion in revenue and a gross margin in the low 60-percent levels.

Although the company's "capital spending surge" is slated to end soon, according to Morgan Stanley, the bank still noted that the trend will limit the company's gross margins in 2025. It remains underweight the stock.

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Disclosure: None. This article is originally published at Insider Monkey.