Texas Instruments saw its stock jump 7% in premarket trading on Wednesday after issuing a first-quarter outlook that exceeded Wall Street revenue expectations and underscored strong demand tied to AI data center investments.
The company projected first-quarter revenue between $4.32 billion and $4.68 billion, compared with the $4.42 billion consensus from LSEG. Management attributed the stronger-than-expected near-term picture to robust analog chip sales, with data center-related business singled out as a key growth driver.
TI produces analog components used to convert signals and manage power in data centers - a different end of the silicon market than high-priced AI graphics processors such as those made by Nvidia. The company has benefited from a wave of spending by technology firms expanding compute infrastructure to support AI workloads, and some analysts see data center demand as a potential tailwind extending into 2026.
Not all analysts are uniformly upbeat. Morgan Stanley noted that while TI is likely to participate in the current upturn, the company faces structural questions tied to several years of heavy capital spending. In a research note, Morgan Stanley observed that "five years of capital spending has brought return on equity down substantially, as equity has grown almost 70% in 5 years, with property, plant, and equipment (PP&E) up four times over that time frame," while net income has remained roughly unchanged from one cycle to the next.
Other risks highlighted by market watchers include broader end-market weakness stemming from a global memory chip shortage. Researchers expect that sales of smartphones and personal computers - categories that are important for TI - could be affected. At the same time, Morgan Stanley indicated that a supply shortage specifically for TI is unlikely given generally low factory utilization worldwide, though geopolitical uncertainty could complicate matters and US-focused production may expose TI to tariffs overseas.
Morgan Stanley also noted that investors may want to see another consecutive quarter of growth before gaining confidence in the durability of the recovery, echoing CEO Haviv Ilan's own caution that "we'll have to see how it plays out." The stock finished 2025 down 7.5%, and TI's 12-month forward price-to-earnings ratio stood at 30.95, versus 29.50 for rival Analog Devices.
Alongside the coverage of TI's outlook, market commentary included mention of analytical tools that evaluate stocks across many metrics. One such tool, ProPicks AI, is described as assessing TXN against thousands of companies using more than 100 financial measures to identify risk-reward profiles; the commentary cited past winners identified by that product, including Super Micro Computer (+185%) and AppLovin (+157%).
The near-term uplift in TI's shares reflects investor appetite for companies supplying components to AI data centers, while analysts and strategists continue to weigh the offsetting effects of multiyear capital intensity, potential end-market softness for consumer electronics, and geopolitical risk factors that could influence supply chains and cost exposure.
Readouts and next steps
- TI's first-quarter revenue guidance: $4.32 billion to $4.68 billion versus $4.42 billion LSEG estimate.
- Market reaction: Shares rose 7% in premarket trading following the outlook.
- Analyst views: Data center demand may support growth into 2026, but capex and return-on-equity pressures warrant scrutiny.