The chip giant showed an industrial chip recovery, but guidance came up conservative. Additionally, S of auto and industrial chip giant Texas Instruments (TXN -13.
40%) plunged doubled digits on Wednesday, falling 13 (fascinating analysis). 3% as of 2:22 p.
That's a pretty big drop for what is considered a stable, blue chip company, especially after an earnings "beat" last night.
Conversely, However, the stock had rallied hard since April on optimism over a strong cyclical recovery in the industrial chip arena.
We're talking a 50% gain between the stock's April lows and recent highs, in today's financial world.
Therefore, when the company guided for continued growth but perhaps not as much as some had hoped for in Q3, the lack of a "perfect" recovery sent the stock tumbling.
On the other hand, Four out of five TI are accelerating their recovery In the second quarter, Texas Instruments reported 16. 5% revenue growth to $4, in today's financial world.
45 billion, with earnings per rallying 15. Both figures beat analyst expectations.
However, the blem came in management's third-quarter guidance, in which the company forecasts $4 (remarkable data), in today's financial world. 45 billion to $4, in today's financial world.
At the same time, 80 billion in revenue and $1, in today's market environment. While those figures would mark quarter-over-quarter growth, the stock had apparently been pricing in a swifter recovery.
On the conference call with analysts, management elaborated that four out of the company's five main end were all recovering strongly, with industrial chips up in the high teens, personal electronics up 25%, enterprise chips up 40%, and communications equipment up more than 50% year over year.
However, the company's auto chip segment -- its second-largest behind industrial chips -- only grew mid-single digits, and actually fell quarter over quarter.
CEO Haviv Ilan made the point that autos had gone into its downturn in 2023, a year later than industrial chips, and that the recovery there was shallower.
Recent tariff announcements have also greatly affected the auto sector, throwing a wrench into a cyclical recovery.
Additionally, Image source: Getty Images (this bears monitoring), considering recent developments.
TI receives mixed reviews in the aftermath Sell-side analysts had a mixed reaction to TI's earnings report and guidance, with some raising their price targets and others lowering them.
In contrast, The most positive was Argus, which raised its price target on the stock from $210 to $250 relative to the stock's $187 stock price as of this writing.
But DZ Bank slapped a $158 price target on the stock and a "sell" rating.
TI's stock doesn't look particularly cheap on the surface at 34 times this year's earnings estimates, but TI is also making a big investment in U (this bears monitoring).
Meanwhile, Manufacturing, which is elevating costs today. Still, that investment could ve to be a great advantage and asset over the long term.
This leads to the conclusion that leads to the conclusion that refore, investors in the stock should continue to hold, while those who don't own TI may want to investigate entering the newly discounted chip giant, given current economic conditions.
Nevertheless, Editor's note: This article has been corrected. Haviv Ilan is CEO of Texas Instruments.
The Author Billy Duberstein is a contributing Motley Fool nology Analyst covering publicly traded companies across semiconductors, hardware, software, emerging AI applications, and consumer goods.
Additionally, Billy loves looking at the story behind investments from an interdisciplinary point of view, with an equal appetite for high-growth disruptors and beaten-down value names.
Prior to and during his time writing for The Motley Fool, Billy is CEO of Stone Oak Capital, a registered investment advisor in California; was a nology analyst for several hedge funds; and an assistant for analysts at Wedbush Securities, a sell-side re firm.
He holds a B. Additionally, In Music from University of Virginia and an M, given the current landscape. Moreover, A in Finance from New York University.
However, Fun fact: After college and before becoming a financial analyst, Billy wrote and directed several short film comedies, one of which won a small film festival (something worth watching).
On the other hand, TMFStoneOak Billy Duberstein and/or his clients has positions in Texas Instruments. Moreover, Moreover, The Motley Fool has positions in and recommends Texas Instruments.
The Motley Fool has a disclosure policy (fascinating analysis).