Texas Instruments Incorporated (TXN.US) continues its recovery momentum! Q1 performance is in full bloom, with data center revenue soaring by 90%. Q2 guidance surpasses market expectations.

Benefiting from a surge in data center and industrial equipment spending, Texas Instruments Incorporated (TXN.US) provided unexpectedly strong performance guidance. The analog chip giant expects second-quarter revenue to be between $5 billion and $5.4 billion, well above the analyst average expectation of $4.85 billion; it expects second-quarter earnings per share to be between $1.77 and $2.05, also significantly higher than the analyst average expectation of $1.57. Boosted by this news, Texas Instruments Incorporated surged more than 10% after the US market closed on Wednesday. At the same time, Texas Instruments Incorporated also reported strong first-quarter performance. The financial report shows that the company's first-quarter revenue increased by 19% year-on-year to $4.83 billion, better than the analyst average expectation of $4.52 billion; operating profit was $1.808 billion, a year-on-year increase of 37%; net profit was $1.545 billion, a year-on-year increase of 31%; earnings per share increased by 31% year-on-year to $1.68, better than the analyst average expectation of $1.38. By business segment, the company's core analog chip business achieved revenue of $3.924 billion in the first quarter, a year-on-year increase of 22%; operating profit increased by 36% year-on-year to $1.638 billion. The embedded processing solutions business (including MCU chips) had revenue of $0.723 billion, a year-on-year increase of 12%; operating profit surged by 205% year-on-year to $0.122 billion. Texas Instruments Incorporated is the world's largest manufacturer of analog chips and embedded processors, its products perform simple but essential functions, and are widely used globally, for example, converting power to different voltages in electronic devices. More importantly, analog chips have played an indispensable role in various key function modules and systems in electric vehicles in recent years, including power management, battery management, sensor interfaces, audio and video processing, motor control, etc. Analog chips convert real-world signals such as sound, temperature, pressure, current, etc., into the digital domain, supporting scenarios such as automotive ADAS, industrial automation, IoT sensors, smart grids, etc. Analog ICs are difficult to replace and have a long design cycle, once implemented they have long-term stickiness. MCUs are the "brains" of electronic devices, controlling logic and real-time computing, present in almost all networked or electromechanical systems (home appliances, meters, body control, medical monitoring, etc.), Texas Instruments Incorporated's TI MSP430, C2000, Arm-M series MCU products lead in low-power and industrial real-time control fields. Texas Instruments Incorporated has a market share of about 19%-20% in the global analog chip market. The company offers over 80,000 analog, power, signal chain, and MCU products to over 100,000 large customers, penetrating almost all terminal markets (automotive, industrial, communication, consumer electronics, medical, etc.). This "ubiquitous" coverage makes its financial reports an important indicator of the overall economic situation. It is worth mentioning that Texas Instruments Incorporated's first-quarter guidance for 2026, announced at the end of January, has already shown signs of recovery. Although the company's performance in the fourth quarter of 2025 was slightly below market expectations, its first-quarter guidance far exceeded market expectations. The company's consecutive issuance of performance guidance that greatly exceeds expectations for two quarters in a row indicates that there is a significant rebound in demand for analog chips and MCUs in the large industrial equipment and automotive sectors, recovering from the "darkest hours of analog demand" in 2023, especially as the anticipated "AI data center construction boom driving strong recovery of analog chip demand" is unfolding. Texas Instruments Incorporated CEO Haviv Ilan stated during a call with analysts that the recovery in industrial component demand covers all regions and all segment markets. He pointed out that the company's revenue is still below its previous peak levels, but this is sparking optimism in the market for the potential sustainable growth momentum. He said, "There is still a lot of room for growth. I see that in all sectors of the industrial industry." Haviv Ilan added that after a "long hibernation period," a widespread recovery is finally beginning to show. Texas Instruments Incorporated is also gaining a larger share of data center spending, which has been driven by the demand for artificial intelligence. While the company does not produce the high-end digital processors used in AI computers, its chips are used to control power and execute other critical functions in data centers. Its data center business currently contributes over $1 billion in annual revenue, which grew over 60% in 2025 and increased by 90% in the first quarter. AI data centers are elevating analog demand (especially power and signal chain) to a new level, but not in the explosive style of GPUs/HBMs. The increment brought by the data center business to analog chip manufacturers such as Texas Instruments Incorporated will mainly show in power management/protection and monitoring analog devices. Compared to GPUs/ASICs/HBMs, data center analog devices, driven by the booming global AI data center construction, are more likely to present a "broader, more robust, and longer cycle" recovery rhythm. Another positive signal is that Texas Instruments Incorporated is reducing its spending on new factories, freeing up more free cash flow, which may be used for investor returns. In the expansion process, the company is going against the industry trend by not adopting the common outsourcing production model. Its goal is to strengthen control over the manufacturing process and better seize future demand opportunities by using more advanced production equipment. However, the cost of this strategy is a reduction in funds available for stock repurchases and dividends, which used to be a key attraction for investors. Currently, Texas Instruments Incorporated is gradually reducing its large-scale investments in factory networks, including a new factory located about an hour's drive north of its headquarters in Dallas. The company's expenditure on new factories and equipment in the first quarter was $676 million, lower than the $1.1 billion in the same period last year. It still maintains a capital expenditure plan of $2 billion to $3 billion for this year. Recently, Texas Instruments Incorporated reached a significant deal to drive growth. In February of this year, the company agreed to acquire Silicon Laboratories for approximately $7.5 billion, with the transaction expected to be completed in the first half of 2027.