Texas Instruments (Texas Instruments (TXN)) reported second-quarter earnings that beat Wall Street's estimates, but the stock still took a hit in premarket trading Thursday. The culprit? Probably profit-taking after a massive rally, not disappointment with the numbers.

The chipmaker posted revenue of $5.46 billion, topping the $5.25 billion analysts were looking for. Earnings came in at $2.14 per share, well above the consensus estimate of $1.92 per share. Revenue grew 13% sequentially and 23% from a year ago, fueled by strength in its Analog and Embedded Processing businesses.

Gross profit rose to $3.4 billion, giving the company a 61% gross margin. Operating profit jumped 48% year over year to $2.3 billion. Texas Instruments generated $2.7 billion in operating cash flow during the quarter and spent $514 million on capital expenditures. It ended the quarter with $7 billion in cash and short-term investments.

Industrial, Data Center Drive Growth

Industrial revenue increased about 30% from a year earlier and 10% sequentially, supported by broad-based demand. Automotive revenue grew in the mid-teens year over year and in the upper-single digits sequentially. Data center revenue doubled from a year earlier and increased about 20% from the previous quarter.

Within its business segments, Analog revenue rose 26% year over year, while Embedded Processing increased 16%. The Other segment declined 2%. Personal electronics revenue was flat from a year earlier but improved sequentially. Communications equipment revenue increased on both an annual and sequential basis.

Outlook And CFO Transition

Texas Instruments said AI infrastructure demand remains a long-term growth driver, with management expecting strong data center demand to continue as higher-power server architectures require more analog and embedded chips.

For the third quarter, Texas Instruments expects revenue of $5.65 billion to $6.15 billion, compared with analysts' estimate of $5.61 billion. The company forecast earnings of $2.23 to $2.57 per share, above the consensus estimate of $2.15 per share.

Texas Instruments said it continues to implement price increases amid strong demand while expanding its 300-millimeter manufacturing capacity.

The company also announced that Julie Knecht will succeed Rafael Lizardi as chief financial officer following his retirement.

Why Texas Instruments Stock Is Falling

The pullback appears to stem from profit-taking following the stock's nearly 70% year-to-date rally, rather than disappointment with the company's latest results. Cautious premarket sentiment across the broader market also weighed on investor positioning.

Nasdaq futures slipped 0.32%, while S&P 500 futures lost 0.33%, adding pressure to semiconductor stocks.

Texas Instruments remains well above its long-term trend levels. However, the recent pullback has left the stock under pressure in the short term as traders lock in gains.

Texas Instruments remains under short-term pressure, trading below its 20-day and 50-day moving averages. However, it stays above its 100-day and 200-day averages, keeping the longer-term uptrend intact. The RSI of 48.47 signals neutral momentum. Resistance stands near $315.50, while support is around $276.00.

TXN Price Action: Texas Instruments shares were down 5.14% at $279.06 during premarket trading on Thursday.