- Chip maker tops analyst estimates on revenue and earnings
- Stock seen rising 4%, according to pre-market data
- Electric vehicles in China helping offset soft industrials demand
There’s been plenty for investors to think about around the chips space after ASML’s (ASML:AMS) shock bookings miss rocked the sector. TSMC (2330:TPE), the world’s biggest contract chip manufacturer, has subsequently offered a boost to confidence and Texas Instruments (TXN:NASDAQ), a key player in analog chips market, lifted the mood overnight after reporting third quarter income and profits that topped analysts’ expectations.
EPS (earnings per share) came in at $1.47 on revenue of $4.15 billion in the three months to 30 September 2024, the manufacturer of semiconductors that help power electronic devices said. Analysts polled by Investing.com had anticipated EPS of $1.38 on sales of $4.12 billion, so it was a decent beat.
Pre-market data indicates a 4% rally for the stock when Wall Street reopens later today, to $193.97.
Just as important was the commentary, where the firm’s chief executive Haviv Ilan said the company is benefiting from ‘momentum’ for electric vehicles in China, adding ‘our content is growing there’ and ‘really drove the growth in the third quarter.’
Analysts said the automotive unit’s returns counterbalanced weakness in Texas Instruments’ industrials division.
FINAL QUARTER GUIDE LOOKS SOFT
That sounds fine but fourth quarter guidance still looks soft. Texas Instruments guided for earnings per share of between $1.07 and $1.29, or $1.18 at the midpoint, and revenue of $3.7 billion to $4 billion. That compared with estimates for earnings of $1.34 a share on revenue of $4.07 billion.
In a note to clients, analysts at Bernstein flagged they are ‘hesitant to build a bull case’ around Texas Instruments’ shares based solely on the strength of its electric vehicle business in China, saying ‘it's really not that big, and the rapid increase in recent quarters carries sustainability concerns.’
They added that they see another substantial reset to numbers both on the top line and gross margins. ‘We love Texas Instruments as a company, but we do question what one is playing for here’, the analysts wrote. ‘But for now clearly nothing bad is sticking to their pan.’
The figures come as markets are closely eyeing results from global semiconductor firms in attempt to gauge the outlook for chip demand.
The Philadelphia Semiconductor Index, or SOX as it is often called, has had a strong year to date, up 27%, although much of that strength can be attributed to Nvidia’s (NVDA:NASDAQ) stunning 198% 2024 gains.
