What Happened?
Shares of analog chip manufacturer Texas Instruments (NASDAQ: TXN) fell 6.8% in the afternoon session after the company issued a disappointing financial outlook for its upcoming fourth quarter, overshadowing third-quarter results that topped Wall Street's revenue expectations.
The chipmaker's forecast for the fourth quarter fell short of analysts' consensus for both revenue and profit. Texas Instruments projected revenue with a midpoint of $4.4 billion, below the estimate of $4.52 billion. Furthermore, its earnings per share guidance of $1.26 at the midpoint also missed forecasts. The weak guidance signaled to investors that near-term challenges could lie ahead, prompting a negative reaction in the stock.
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What Is The Market Telling Us
Texas Instruments’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock dropped 3.1% on the news that the threat of a 'massive increase' in tariffs on Chinese goods by President Donald Trump, reignited fears of a trade war.
In a social media post, Trump described China as becoming 'hostile,' sending a ripple of concern through the market. The semiconductor sector, which relies heavily on global supply chains and sales in China, was hit particularly hard. The Philadelphia SE Semiconductor index dropped 3.4% following the announcement. This development adds to existing tensions, including Beijing's recent expansion of export controls on rare earths and an antitrust probe into Qualcomm's acquisition of Autotalks. Investors demonstrated caution as the prospect of escalating trade disputes between the world's two largest economies could disrupt production and demand for chipmakers.
Texas Instruments is down 11% since the beginning of the year, and at $166.40 per share, it is trading 24.8% below its 52-week high of $221.25 from July 2025. Investors who bought $1,000 worth of Texas Instruments’s shares 5 years ago would now be looking at an investment worth $1,123.
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