Texas Instruments Inc

Texas Instruments delivered another strong set of quarterly results, with revenue coming in above the top end of guidance and around 4% ahead of consensus, representing growth of 23% year-on-year and 13% sequentially. Growth was broad-based across both major segments, with Analog revenues increasing 26% year-over-year and Embedded Processing up 16%. Management also guided to third-quarter revenue and earnings per share comfortably above consensus. Looking further ahead, we continue to see attractive structural growth drivers across the business, including increasing semiconductor content in industrial and automotive applications, rising demand from data centres, and the long-term electrification and automation of the global economy.

Texas Instruments was one of the Fund’s top-performing stocks, driven by a very strong earnings print that exceeded expectations and pushed shares up 19.4% on the day of results. Management highlighted stabilising demand trends, improving factory utilisation, and a clearer path to free cash flow recovery. The industrial business, which is the company’s largest end-market, showed significant growth, with Q1 revenue growing 19% year-on-year. The combination of an accelerating industrial recovery and emerging AI-related growth reinforced investor confidence that the business is entering a stronger phase of the cycle.

Texas Instruments has reported strong industrial growth and improving demand, reflecting a broader, more durable growth story in semiconductors. The manager highlights that growth is no longer dependent on unit volumes alone, as structural drivers like electrification and AI, combined with cyclical recovery, create an attractive opportunity set. The shift towards software-defined vehicles and industrial automation further reinforces the demand for semiconductors, positioning Texas Instruments favorably in this evolving landscape.

We recently initiated a position in Texas Instruments (TXN), the leading analog semiconductor manufacturer. The company is coming out of a six-year investment cycle, having spent $20 billion building out state-of-the-art semiconductor fabrication capacity that should drive higher volumes and improved profitability. At the same time, the analog market is emerging from a prolonged downturn and beginning to recover. The combination of a cyclical upturn and structurally improving cash flows creates a compelling opportunity.

We view TXN as a very high-quality company with a tremendous track record of success that is unlikely to abate into the future. We first established this position back in 2022 and added to it opportunistically over the subsequent years whenever the valuation became attractive. Despite the share price advancing to a point where we felt the valuation was too 'rich' relative to our estimate of intrinsic value, we are excited about how our Fund is positioned and believe in the long-term earnings power of this company.

Texas Instruments Incorporated (TXN) has benefited from AI-driven demand for analog power and processing chips, supporting the business's growth. The manager remains constructive on TXN's ability to navigate the broader cycle, indicating confidence in its long-term prospects. Despite trimming the position on recent strength to manage semiconductor concentration, the overall outlook for TXN is positive, reflecting its strong market position and the ongoing demand in the semiconductor sector.

Texas Instruments designs, manufactures and sells analog and embedded processing chips for vital functions in a broad array of applications. Shares were strong during the quarter as sustained AI demand for graphic processing units (GPUs), central processing units (CPUs) and connecting-network systems underpinned the need for TI’s analog semiconductors to manage power, battery systems and networking systems. Higher than expected earnings guidance further fortified returns.

I also added Texas Instruments, which makes analog and power management chips. Texas Instruments and Martin Marietta might be getting a nice temporary bump in profits and revenues from helping build out AI infrastructure, but AI and data center-related revenues are by no means the majority of revenues for either of these two companies. I like that they all generate revenues and profits from other sources.

Texas Instruments, a global supplier of analog and embedded semiconductors, reported strong results and a good outlook due to the combination of strong end market conditions and accelerating demand for products used in datacenters. This positions the company well to benefit from the ongoing trends in AI and data center growth, reinforcing its competitive advantage in the semiconductor space.

Texas Instruments has been a top contributor to the Fund this quarter, with recent results being very strong. The company is benefiting from a rally in analog semiconductors, particularly driven by power management solutions. This positive sentiment and performance indicate a robust position in the market, suggesting that Texas Instruments is well-placed for continued success.