Texas Instruments Posts Fourth Straight Quarter of Margin Growth
Texas Instruments (TXN) reported second-quarter revenue of $5.46 billion, up 23% from a year earlier, as operating margin expanded to 42.3% and guidance for the current quarter topped analysts' expectations for sequential growth.
Texas Instruments (TXN) reported second-quarter revenue of $5.46 billion, up 13% sequentially and 23% year over year, extending a recovery that began after a 7% sequential decline in the fourth quarter of 2025. The chipmaker's year-over-year growth rate has climbed for two consecutive quarters, moving from 10% in the fourth quarter to 19% in the first quarter and now 23%, after bottoming out in late 2025.
The rebound has been accompanied by broad margin expansion rather than a one-time pop. Operating margin reached 42.3% of revenue in the second quarter, up from 37.5% in the first quarter, 33.3% in the fourth quarter of 2025 and 35.1% a year earlier, marking four straight quarters of improvement. Net income rose 53% to $1.98 billion, an acceleration from 31% growth in the prior quarter and a reversal of the 3% decline reported in the fourth quarter of 2025. Earnings per share climbed 52% to $2.14, compared with 31% growth in the first quarter and a 2% decline in the fourth quarter of 2025.
Second-quarter results included a 5-cent one-time benefit that was not part of Texas Instruments' original guidance, the second consecutive quarter with a positive surprise of that size. That follows a 6-cent negative surprise in the fourth quarter of 2025 and a 10-cent shortfall the quarter before that, a swing the company attributed in part to timing on incentive-related items.
The Analog segment, Texas Instruments' largest, generated $4.365 billion in revenue, up 26% year over year and accelerating from 14% growth in the fourth quarter of 2025; segment operating profit rose 50%, compared with 13% growth in the earlier period. Embedded Processing operating profit nearly doubled year over year, up 98% to $168 million, a sharp step up from 22% growth in the fourth quarter. The company's smaller Other segment continued to contract, with revenue down 2% to $310 million after a 34% decline in the fourth quarter of 2025, underscoring that growth has been concentrated in the core Analog and Embedded Processing lines.
Free cash flow on a trailing 12-month basis more than tripled year over year to $6.53 billion, or 33.6% of revenue, up from 23.6% in the first quarter, 16.6% in the fourth quarter of 2025 and 14.0% in the third quarter. That improvement has come alongside a steady pullback in capital spending, with trailing capital expenditures falling for four straight quarters to $3.3 billion from $4.8 billion a year earlier, even as revenue growth accelerated.
Texas Instruments also drew a larger benefit from CHIPS Act incentives, with trailing 12-month cash proceeds surging to $850 million from $203 million a year earlier, including a new $549 million single-quarter inflow that had no counterpart in the first quarter or earlier periods. A $17 million quarterly acquisition charges line item, tied to the pending Silicon Labs acquisition announced February 4, 2026, appeared for a second straight quarter, replacing an $85 million restructuring charges line that had shown up in the third quarter of 2025.
For the third quarter, Texas Instruments guides revenue of $5.65 billion to $6.15 billion, a midpoint of $5.90 billion that implies 8% sequential growth. That matches the sequential growth rate implied by the guidance given last quarter, when the company pointed to $5.00 billion to $5.40 billion following $4.83 billion in actual first-quarter revenue, and represents a stronger absolute guide than the $4.32 billion to $4.68 billion range issued for the first quarter, itself roughly flat with the fourth quarter's $4.42 billion in actual revenue.
Stock repurchases continued to slow, with trailing 12-month buybacks falling 61% year over year to $707 million, following a 38% decline reported in the first quarter, even as dividend payments rose 4% year over year. The current portion of long-term debt has held at $1.149 billion through the first two quarters of 2026, up from $500 million in the third quarter of 2025, reflecting a debt maturity moving into current liabilities.