Texas Instruments Stock Rallying Into Earnings – What To Expect

Texas Instruments’ stock (NASDAQ:TXN) is heading into earnings off the back of very solid month in the markets, up 12.28% at $197.26. The company reports fiscal Q4 2025 results after market close, with plenty of eyes wondering how the stock will respond to the print.

Expectations sit at $1.28 EPS on $4.43B revenue, marginally above management’s prior midpoint of $1.26 EPS and $4.40B revenue, creating limited upside room if execution merely meets guidance.

The setup reflects a market that raised estimates aggressively through mid-2025 following a sharp Q1 beat, then turned cautious into year-end as management repeatedly framed tariff disruption and shallow automotive recovery as constraints on demand visibility.

The Street’s Q4 EPS estimate has declined from $1.41 in October to $1.28 currently, a 9% downward revision that suggests analysts are pricing in a more moderate recovery pace than the company’s Q1 and Q2 results initially implied.

What the result will determine is whether TXN can sustain the 10.7% year-over-year revenue growth trajectory without leaning on customer inventory pull-ins, a dynamic that would validate the current 35.8x trailing P/E multiple.

The stock trades at a premium to the semiconductor peer group despite flat year-over-year EPS growth expectations, positioning that requires either a material beat on Q4 results or forward guidance that de-risks the tariff and China demand narratives.

Consensus Estimates

Consensus sits 1.6% above management’s prior EPS midpoint and 0.7% above the revenue midpoint, a narrow buffer that leaves limited room for positive surprise. The estimate range width is notable: EPS spans $1.11 to $1.58, a 42% spread that reflects divergent views on whether tariff-related pull-ins inflated Q3 results or whether underlying demand has genuinely inflected. Revenue estimates tightened from $4.51B in October to $4.43B currently, a $80M reduction that aligns with management’s cautious tone on Q3’s call regarding “moderate pace” recovery.

The 10 upward EPS revisions in the past 30 days occurred despite the absolute estimate declining, suggesting analysts are adjusting their models for lower tax rates or discrete items rather than improving operational outlook. The year-over-year comparison shows the tension in the setup: revenue growth of 10.7% against EPS contraction of 12.8%, implying margin compression that consensus expects management to address through cost discipline or mix improvement in 2026.

Management Guidance and Commentary

“We continue to see a moderate pace of recovery across our end markets, with particular strength in industrial applications offset by ongoing weakness in automotive and persistent uncertainty in China demand patterns.”

Management’s October commentary established a framework where revenue growth would continue but at a decelerating rate, with tariffs and geopolitics creating supply chain disruption that complicates demand visibility. The company guided Q4 revenue to a $4.22B to $4.58B range with a $4.40B midpoint, below the Street’s $4.51B expectation at the time. The EPS guide of $1.26 midpoint incorporated assumptions about gross margin holding near 57% and operating expenses remaining disciplined, but did not provide explicit assumptions about customer inventory behavior or the magnitude of tariff-driven pull-ins.

The gap between the October guide midpoint and current consensus is minimal: $30M on revenue (0.7%) and $0.02 on EPS (1.6%). This tight positioning means a “beat” requires either execution above the high end of the guided range or favorability in discrete items such as tax rate. The critical question for January 28 is whether management can characterize Q4 demand as “broad-based” without qualifying it as pull-in driven, the same framing that supported the Q2 beat.

Analyst Price Targets & Ratings

Wall Street sentiment has turned cautious, with 48% of analysts rating shares a Hold versus just 44% recommending Buy or Strong Buy. The consensus target of $194.98 implies slight downside from current levels, reflecting concerns about valuation and forward visibility. The rating distribution shows a market that has moved from bullish to neutral as the recovery narrative has matured and valuation concerns have emerged.

Sector & Peer Comparison

Texas Instruments trades at a 16% premium to Taiwan Semiconductor on trailing P/E (35.8x vs 32.0x) despite TSM’s superior profit margin (45.1% vs 29.2%), a valuation gap that reflects TXN’s analog market dominance and capital return profile rather than growth expectations. The forward P/E of 28.5x sits above NVIDIA (24.3x) and TSM (25.5x), positioning that requires either margin expansion or revenue growth acceleration to justify.

Earnings Track Record

Texas Instruments has beaten EPS estimates in 17 of the last 18 quarters, a 94.4% success rate that establishes credibility on execution. The average surprise of 7.6% suggests the company consistently manages Street expectations conservatively, though the Q3 2025 miss demonstrates that even minor shortfalls trigger sharp reactions when guidance disappoints.

Post-Earnings Price Movement History

The pattern reveals that beats do not guarantee rallies, and the magnitude of the beat matters far less than the forward guidance. The Q1 2025 result delivered a 20.8% EPS surprise but rallied only 0.9% because guidance, while above consensus, did not exceed expectations dramatically. The Q3 2025 miss triggered immediate selling, demonstrating the market’s sensitivity to execution shortfalls.

Expected Move & Implied Volatility

The options market is pricing a 4.2% move in either direction, above the historical average and consistent with recent quarters when guidance disappointed. The implied volatility premium over historical volatility suggests the market is pricing event risk beyond what recent price action would imply.

Expert Predictions & What to Watch

Key Outlook: Neutral with Downside Bias

Key Metrics to Watch

The Q1 2026 revenue guide is the single most important number on the call. Current consensus of $4.41B implies sequential decline from Q4, typical seasonally but a potential red flag if management frames it as demand softening rather than normal patterns. A guide to $4.50B or higher would shift the narrative to acceleration and likely drive the stock toward $210. A guide to $4.35B or lower would trigger estimate cuts across 2026 and likely send the stock back toward $180.