Texas Instruments had just about a perfect quarter, validating a broad recovery in the semiconductor industry. It still wasn't enough for investors, which could be a warning for other chip stocks in the weeks ahead.

The Dallas-based company, traditionally a bellwether for the semiconductor industry, reported better-than-expected earnings and revenue for the second quarter. The results included broad growth across industrial, automotive, and data-center markets.

But Texas Instruments stock was down 5.3% in premarket trading Thursday anyway. The reaction may reflect investors' elevated expectations following a historic run for the sector.

Texas Instruments reported earnings of $2.14 a share, well above analysts' estimate of $1.94, per FactSet. Revenue surged 23% year over year to $5.46 billion -- a record quarterly number -- beating Wall Street's call for $5.26 billion.

Operating margins were strong at 42.3%, up from 37.5% last quarter and 35.1% last year.

Guidance also looked solid. The chip maker expects earnings per share of $2.23 to $2.57 in the third quarter, surpassing a consensus forecast for $2.18. It projected revenue of $5.65 billion to $6.15 billion, above the $5.63 billion analysts had anticipated.

Texas Instruments makes processors and analog chips for a broad array of industrial, consumer, and automotive uses, rather than advanced artificial-intelligence chips. Wednesday's results point to a continued upswing in this highly cyclical part of the semiconductor industry, which bottomed out in 2024.

That recovery wasn't a secret: Texas Instruments stock has jumped 70% to $294.19 this year as of Wednesday's close of trading.

The company isn't totally removed from the AI trade, though. CEO Haviv Ilan said sales to data-center end markets doubled from last year after rising 90% last quarter. The segment, which mostly consists of power-management chips, is a relatively small slice of Texas Instruments' business, but it was a line item analysts were watching.

Texas Instruments remains the 11th largest holding in the iShares Semiconductor exchange-traded fund, which has dominated investors' attention in 2026. That ETF and Texas Instruments stock have moved in lockstep this year.

That close connection make Wednesday's earnings print a double-edged sword for shareholders waiting on other chip makers. Sure, those results should be excellent, too, but it isn't clear whether the market will reward them.

Write to Nate Wolf at nate.wolf@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 23, 2026 06:07 ET (10:07 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.