Texas Instruments (NASDAQ:TXN) released its Q1 2025 earnings this week and posted results that substantially exceeded analyst expectations. The semiconductor giant reported an 11.1% year-over-year revenue increase and earnings per share that beat estimates by over 20%. Following the announcement, TXN shares jumped more than 5% in after-hours trading.
The stock was down significantly year-to-date before the Q1 earnings report, but investor confidence seems to have returned strongly afterwards. Guidance for Q2 also surpasses expectations, so is it time to buy?
Texas Instruments reported Q1 2025 revenue of $4.07 billion, and this is against analyst estimates of $3.91 billion and implies an increase of 11.1% year-over-year. Even more impressive was the company's earnings per share of $1.28, which beat analyst consensus by 20.8%. The analog segment saw a 13% increase in revenue, whereas the industrial sector grew by upper single digits after seven quarters of decline.
Texas Instruments also reported a gross profit of $2.3 billion. This constitutes 57% of total revenue, and operating profit at $1.35 billion is 33% of revenue, up 3% from the year before. That said, CapEx of $1.1 billion resulted in negative free cash flow for the quarter. On a trailing twelve-month basis, however, free cash flow was solid $1.7 billion.
Texas Instruments provided a surprisingly optimistic outlook for Q2 2025. It sees revenue between $4.17 billion and $4.53 billion (midpoint $4.35 billion). And this is significantly above analyst expectations of $4.14 billion. The company also forecast earnings per share between $1.21 and $1.47 for Q2, with the midpoint exceeding analyst estimates by 11.9%.
The consensus price target implies 15.3% upside potential from here. I think it’s worth buying for the long run, though there are better buying opportunities in the chip space. NVIDIA (NASDAQ:NVDA) is something I’d load up on before TXN. The stock comes with a 3.36% dividend yield, so dividend investors could buy this for a blend of growth and income.
