What Happened?

Shares of analog chip manufacturer Texas Instruments (NASDAQ:TXN) fell 5.9% in the morning session after the company reported underwhelming fourth-quarter results, with earnings guidance for the next quarter falling short of Wall Street's expectations. Adding to the negative was the fact that inventory levels increased, contributing to weaknesses in Japan and Europe, especially in the auto, and industrial markets. These weaknesses were partly offset by continued strength in China's auto and smartphone markets. These pockets of strength helped drive revenue and EPS past Wall Street's estimates during the quarter. Overall, we think this was a mixed quarter with guidance weighing on shares.

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What The Market Is Telling Us

Texas Instruments’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 9 months ago when the stock gained 7.8% on the news that the company reported first-quarter results that topped analysts' revenue and EPS expectations, driven by strong performance in its analog segment. Looking ahead, next quarter's revenue guidance was above Wall Street's estimates. On the other hand, its gross margin fell, and its inventory levels increased. Overall, this was a decent quarter for Texas Instruments.

Texas Instruments is up 0.1% since the beginning of the year, but at $187.23 per share, it is still trading 15% below its 52-week high of $220.29 from November 2024. Investors who bought $1,000 worth of Texas Instruments’s shares 5 years ago would now be looking at an investment worth $1,434.

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