What Happened?

Shares of analog chip manufacturer Texas Instruments (NASDAQ: TXN) fell 12.3% in the afternoon session after it issued a weaker-than-expected forecast for the third quarter, sparking concerns about future demand for its chips. 

The disappointing guidance overshadowed the company's second-quarter results, which had actually surpassed Wall Street's expectations for both revenue and earnings. For the current third quarter, Texas Instruments projected earnings per share between $1.36 and $1.60, with the midpoint falling below analysts' consensus of $1.51. The company also forecast revenue in the range of $4.45 billion to $4.80 billion, which was viewed as cautious. Management attributed the soft outlook to a difficult automotive market and uncertainties related to U.S. tariffs, which may have caused some customers to pull orders forward, making true demand difficult to assess. Because Texas Instruments serves a vast number of customers across many sectors, its performance is often considered a bellwether for the technology industry. The cautious forecast sent a ripple effect through the semiconductor sector, with shares of peers like Analog Devices (ADI) and NXP Semiconductors (NXPI) also trading lower.

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What Is The Market Telling Us

Texas Instruments’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Texas Instruments and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 7 days ago when the stock dropped 3% after a cautious outlook from semiconductor equipment giant ASML sparked a broad sell-off across the sector, hitting chipmakers and equipment suppliers alike. 

The negative sentiment was triggered after the Dutch firm, whose complex machines are essential for producing advanced chips, warned it could no longer guarantee growth in 2026. ASML's management cited "increasing uncertainty driven by macro-economic and geopolitical developments," including the potential for new U.S. tariffs. 

As an industry bellwether, a company whose performance is seen as an indicator of the entire sector's health, ASML's comments are a key signal of future capital spending. The warning sent a chill through the market, as concerns grow that trade tensions could disrupt the highly globalized semiconductor supply chain and slow down investment from chip manufacturers.

Texas Instruments is up 1.3% since the beginning of the year, but at $189.47 per share, it is still trading 14.4% 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 $1,468.

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