Expectations for a recovery in automotive chips are becoming increasingly divergent, and NXP Semiconductors NV (NXPI.US) saw after-hours selling after its Q4 guidance fell short of expectations.

NXP Semiconductors NV (NXPI.US) released its Q3 2026 financial results after the U.S. market close on October 27 (early morning Beijing time on October 28). Quarterly revenue was US$3.786 billion, up 19% year-over-year and above the market consensus; non-GAAP diluted earnings per share were US$4.20, up 35% year-over-year, also beating expectations. Non-GAAP gross margin was 58.6%, and operating margin was 37.1%; quarterly free cash flow was US$1.21 billion, accounting for 31.9% of revenue. By segment, automotive revenue was US$2.07 billion, up 13% year-over-year; industrial and IoT was US$802 million, up 39% year-over-year; communications infrastructure and other was US$503 million, up 54% year-over-year, with the company saying momentum in data center infrastructure continued; mobile was US$411 million, down 4% year-over-year. After the earnings release, NXP Semiconductors NV fell nearly 9% at one point in after-hours trading. As of publication, the stock was down 7.87% at US$234. What weighed on the stock was guidance. The company expects fourth-quarter revenue of US$3.75 billionUS$3.95 billion, with a midpoint of US$3.85 billion (up about 15% year-over-year), below analysts' expectation of US$3.87 billion; the midpoint of non-GAAP operating profit was US$1.44 billion, also slightly below expectations. CEO Rafael Sotomayor said company-specific growth drivers in automotive and industrial are contributing at an accelerating pace, and software-defined vehicles and trusted physical AI open up long-term space. The company also announced a new US$5 billion share repurchase authorization. It is worth noting that NXP's largest competitor, Texas Instruments Incorporated, last week issued a strong revenue forecast, saying there will be "broad-based growth in industrial, automotive and data center sectors." Texas Instruments Incorporated said it plans to expand capacity to meet growing orders and may reach a relatively high level in its budget for new factories and equipment in 2026. The divergence in the two companies' outlook statements, combined with market concerns about an AI bubble, amplified the selloff triggered by this guidance shortfall.