NXP, Maker Of Chips For Your Car, Posts Strongest Growth In Years—But Wall Street Is Not Convinced

Core Insights - NXP Semiconductors NV reported its strongest quarterly growth since 2021, with an 8% sequential increase in revenue, driven by improvements across all regions and end markets [1][2][6] - The company anticipates an above-seasonal December quarter, with automotive shipments aligning more closely with end demand and early signs of recovery in industrial and IoT markets [1][3][6] Financial Performance - NXP's third-quarter revenue reached $3.17 billion, reflecting an 8% sequential growth but a 2% decline year-over-year, slightly exceeding expectations [6] - The automotive segment grew by 6% quarter-over-quarter, while industrial/IoT and communications infrastructure segments also showed growth [6] - For the December quarter, NXP guided for $3.3 billion in revenue, representing a 4% sequential increase and a 6% year-over-year increase, with a gross margin outlook of 57.5% and EPS guidance of $3.28 [6] Market Outlook - The December-quarter outlook indicates a continuation of year-over-year growth, with a potential restocking phase in the automotive sector that could significantly boost revenue once market sentiment improves [3][4] - Encouraging signs of recovery in the industrial and IoT markets suggest that revenue has bottomed out and is rebounding in the second half of 2025 [5] - Management expects a typical seasonal decline in the March 2026 quarter, but additional channel restocking could add approximately $150 million in sales as inventory levels normalize [5] Analyst Commentary - JP Morgan analyst Harlan Sur maintained a Neutral rating on NXP and raised the price forecast from $240 to $245, reflecting improved cyclical trends and steady demand recovery [1][7] - Sur noted that NXP is well-positioned for continued growth as the semiconductor cycle strengthens into 2026 [7]