Texas Instruments faces declining sales, weak Q1 outlook

Shares of Texas Instruments (TXN) fell after the chipmaker reported disappointing fourth-quarter earnings results and issued weak first-quarter guidance. Texas Instruments missed expectations for both revenue and EPS amid a 13% year-over-year sales decline.

The company cited a broad demand slowdown for its analog and embedded processing chips used across industries like automotive and personal electronics.

Yahoo Finance's Madison Mills breaks down the details.

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Editor's note: This article was written by Angel Smith

Video Transcript

SEANA SMITH: All right, let's take a look at our stock to watch today, and that is Texas Instruments. Now the chip maker giving weak quarterly guidance-- you're seeing that reflected in the share price here, just ahead of the open. Madison Mills standing by on the floor of the New York Stock Exchange with the latest on that for us. Mady.

MADISON MILLS: The first of many in the chip sector that's going to be reporting earnings this cycle, and that's why this is our stock to watch this morning because TI can be considered a bellwether for the broader space. We've got a miss on EPS and a miss on revenue, with sales down by a whopping 13% for Texas Instruments.

Now I just want to point out that yes, we're saying things like chips here, but this is an analog chips maker. This is not your AI chips play that you're going to see in an AMD and an NVIDIA. This is the chip that allows you to press a button on your calculator and run some calculation-- a little bit triggering for me of calculus class back in high school. But that's what their chips business is really about.

But they also produce chips across a variety of sectors-- it's industries, it's autos. And that's, again, why this is a bellwether for the broader space, because they're seeing a decline in demand across multiple sectors. And that is not going to be good news.

That's one of the reasons why we saw this being the most shorted chips move in the latter half of 2023. And of course, it's trailing the broader stocks index this year as well. Moving forward, they're investing about $5 billion a year to upgrade their manufacturing so that they can play with those other folks I mentioned, the NVIDIAs of the world. Well, we'll have to see whether or not that boosts their stock price.