TXN Likely to Beat Q4 Earnings Estimates: How to Play the Stock

Core Insights - Texas Instruments (TXN) is set to report its fourth-quarter 2025 results on January 27, with expected earnings per share ranging from $1.13 to $1.39, and a consensus estimate of $1.30 per share, unchanged from the previous year [1][9] - The company anticipates revenues between $4.22 billion and $4.58 billion for the fourth quarter, with a consensus estimate of $4.44 billion, indicating a growth of 10.7% compared to the same period last year [2][9] Revenue Drivers - The fourth-quarter results are likely to benefit from a gradual recovery in the industrial and automotive end markets, which contribute approximately 70% of Texas Instruments' annual revenues [3] - Other end markets, including Personal Electronics, Enterprise Systems, and Communications Equipment, are expected to show growth due to the recovery in the semiconductor market, particularly driven by strong data center-related growth [4] Customer Demand and Inventory - Customer demand trends are stabilizing, and low customer inventories may support performance in the Analog and Embedded Processing segments, with estimated revenues of $3.53 billion and $618.7 million, respectively, for the fourth quarter [5] Challenges - Texas Instruments' performance may be impacted by the U.S.-China trade war and tariff hikes, as over 20% of its annual revenues in 2024 are derived from China [6] - Rising manufacturing costs due to planned capacity expansions and decreased factory loadings are expected to pose challenges for the company in the upcoming quarter [6] Earnings Prediction Model - The Zacks model indicates a potential earnings beat for Texas Instruments, with an Earnings ESP of +0.35% and a Zacks Rank of 2 (Buy) [7]