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Call sheet · Q3'25

Texas Instruments (TXN)

Q3'25 earnings call · held October 21, 2025 · compared with the Q2'25 call · management-credibility review
9/12
Disclosure score
1 high, 2 medium, 3 low flags
Financial quality
Bottom line
The sleeper story is data center at $1.2B run rate growing 50%+ - it's their fastest growing segment but buried in enterprise/comms until they break it out next quarter. Everyone will focus on the obvious industrial slowdown and margin pressure, but the real question is whether TI can scale data center fast enough to offset cyclical headwinds. The binding constraint isn't demand - it's customer hesitancy on factory investments due to trade uncertainty, which keeps the recovery 'slower than prior upturns.' Most revealing quote: 'We are seeing the market getting back towards trend line, but still below trend line.' My view changes if data center growth accelerates above 50% or if industrial sequential growth turns negative.

The 30-second version

  • Data center is the sleeper - $1.2B run rate growing 50%+ but buried in enterprise/comms
  • Industrial recovery hit a wall - went from 'accelerating' to 'low single digit' sequential growth
  • Gross margin guidance implies sub-55% in Q4 - haven't been that low in a decade

What changed this quarter

MetricQ2'25Q3'25Change
Revenue$4.4B (+16% YoY)$4.7B (+14% YoY)7% sequential growth but YoY decelerated
Gross Margin58.0%57.0%50bps sequential decline
Industrial RevenueUpper teens YoY, mid-teens sequential~25% YoY, low single digits sequentialSequential momentum stalled after hot Q2
Automotive RevenueMid-single digits YoY, down low single sequentialUpper single digits YoY, up ~10% sequentialModest acceleration across all regions
Enterprise Systems~40% YoY, ~10% sequential~35% YoY, ~20% sequentialSequential acceleration, data center driving
Communications Equipment>50% YoY, ~10% sequential~45% YoY, ~10% sequentialYoY growth moderated slightly
Free Cash Flow TTM$1.8B$2.4B (includes $637M CHIPS Act)65% increase year-over-year
Inventory$4.8B (231 days)$4.8B (215 days)Flat dollars, 16 fewer days
CapEx TTM$4.9B$4.8BSlight moderation
Operating Expenses$1.0B$975MDown sequentially, up 6% YoY

Accountability tracked

7 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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