Texas Instruments Inc. (NASDAQ:TXN) stock edged lower in premarket trading Thursday after closing up 2.47% in the previous session, despite the semiconductor company reporting third-quarter earnings that beat Wall Street estimates and issuing upbeat fourth-quarter guidance.

Texas Instruments Beats Earnings Estimates, Issues Strong Outlook

Texas Instruments reported third-quarter earnings of $2.62 per share, beating analysts' estimate of $2.41. The results included a 1-cent reduction not reflected in its original guidance.

Revenue climbed to $6.06 billion from $4.74 billion a year earlier, exceeding the $5.92 billion consensus estimate.

For the fourth quarter, the company expects earnings of $2.45 to $2.79 per share on revenue of $5.8 billion to $6.3 billion. Both forecasts exceeded analysts' estimates of $2.29 per share and $5.73 billion in revenue.

Industrial and Data Center Demand Drives Growth

Texas Instruments reported broad-based growth across its key semiconductor markets. Analog revenue rose 32% year over year, while Embedded Processing revenue increased 21%. Revenue from other businesses declined 6%.

Industrial revenue surged more than 40%, while Data Center revenue jumped 95%. Automotive revenue grew at a mid-teens rate, supported by demand in China and the U.S. Meanwhile, Personal Electronics revenue remained flat, while Communications Equipment revenue increased both sequentially and year over year.

Management expects Industrial, Automotive and Data Center demand to support fourth-quarter sales.

During the earnings call, CEO Gadi Katz said Texas Instruments sees no slowdown in data center spending, but rather "actually growing demand," as the company expands its chip portfolio and seeks to gain market share.

Pricing Trends and Manufacturing Expansion

Texas Instruments reported modest improvement in Analog pricing during the second half of 2026. The company is also discussing pricing arrangements for 2027.

Management reaffirmed its long-term gross-profit fall-through framework of 75% to 85%, excluding depreciation. The company expects fourth-quarter operating expenses to remain flat or rise slightly from the third quarter.

Texas Instruments is also expanding its manufacturing capacity to meet growing demand. Its Sherman facility is ramping new technology, while its second Lehi facility is nearing completion. The company is also expanding assembly-and-test operations in Malaysia.

Management said equipment availability remains a challenge, although it has not observed widespread inventory buildup or major infrastructure bottlenecks.

Automotive, AI and Robotics Offer Growth Opportunities

Texas Instruments sees opportunities in automotive electrification, artificial intelligence infrastructure and robotics.

Hybrid-electric and powertrain systems grew at roughly twice the company's overall rate. Meanwhile, rising electric vehicle exports from China could support additional semiconductor demand.

In Data Centers, Texas Instruments supplies approximately 10,000 part numbers. Demand continues to grow as computing systems require greater power efficiency, cooling and density.

The company also estimates that its semiconductor content in humanoid robots could eventually reach $500 to $1,000 per unit.

Additionally, Texas Instruments expects its Lehi facilities and planned acquisition of Silicon Laboratories to strengthen its Embedded Processing business and expand in-house production.

Capital Spending Outlook

Texas Instruments expects 2026 capital expenditures of $2 billion to $3 billion, potentially near the upper end of that range. However, delays in equipment deliveries, particularly back-end manufacturing tools, could affect spending timelines.

The company plans to continue expanding manufacturing capacity throughout the decade. Management expects to provide additional details on 2027 capital spending during its February capital management call.

TXN Price Action: Texas Instruments shares were down 1.00% at $281.80 during premarket trading on Thursday, according to market data.