Plenty of big tech stocks are reporting their fourth-quarter results right now. The most notable of which include Microsoft, Apple, and Tesla, all of which have or will soon release their Q4 financials. Another tech stock that surprised investors is Texas Instruments (NASDAQ: TXN), which jumped over 5.4% after reporting a red-hot quarter.
American semiconductor manufacturers have suffered from manufacturing issues, but Texas Instruments seems to have emerged from this chip shortage relatively unscathed. The company reported that both revenues and net profits were higher in Q4 than initially expected.
Fourth-quarter revenues were up to $4.83 billion, a 19% growth rate compared to last year, while the net income on that figure settled at $2.14 billion. Wall Street analysts were initially expecting revenues of $4.43 billion per share, with earnings closer to around $1.8 billion.
While most might know Texas Instruments as a company that makes calculators you might have used in school, the company produces chips for a variety of other purposes, including industrial applications, cars, and personal electronics. Texas Instruments is planning to move further into the car industry, especially given the expected demand for new chip-dependent car types, like electric vehicles.
“It’s very easily seen in the automotive market that there’s content growth. We can see the cars today just have more semi content in them per vehicle than what we drove 5 years ago and 10 years ago. And it’s very clear that that’s going to continue,” said Texas Instruments’ head of investor relations David Palhl, in an analyst call.
Overall, the semiconductor industry has been in an ongoing supply crunch. According to a report from the Department of Commerce, semiconductor inventories at manufacturers had fallen to a five-day supply in 2021, compared to the 40-day supply average seen back in 2019 when the industry was doing better.
According to an earlier estimate, around 77% of all companies have managed to beat analyst expectations going into this quarter. However, due to this broader tech selloff we’ve seen in the stock market, these positive results hadn’t had the same bullish effect they had back in Q3 when results were equally as positive. Right now, it seems investors are more concerned about the multiple interest rate hikes expected later this year.
Shares of Texas Instruments were up around 5.5% on the news. Over the past year, shares haven’t performed as well as other more popular chipmakers, like Nvidia, AMD, or Intel. Texas Instruments has gained around 9.5% compared to its market cap one year ago, which isn’t great. We see this reflected in analyst expectations as well. There are 15 Wall Street experts who have a neutral assessment on Texas Instruments, while four have a sell rating.
Texas Instruments Company Profile
Dallas-based Texas Instruments generates about 95% of its revenue from semiconductors and the remainder from its well-known calculators. Texas Instruments is the world’s largest maker of analog chips, which are used to process real-world signals such as sound and power. Texas Instruments also has a leading market share position in digital signal processors, used in wireless communications, and microcontrollers used in a wide variety of electronics applications. – Warrior Trading News
