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Texas Instruments leads semiconductor higher after strong Q2, ‘optimistic’ guidance

Headquarters of Texas Instruments World

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Following the Federal Reserve’s decision to raise its key interest rate by 75 basis points, Texas Instruments (NASDAQ:TXN) led chip stocks higher on Wednesday, up nearly 7%, as the same semiconductor company released second-quarter results showing topped expectations and issued “optimistic” guidance.

Susquehanna analyst Christopher Rolland, who has positive ratings and a $215 price target on Texas Instruments (TXN), noting that the company “overestimated” the impact it would see from China’s COVID-related lockdowns.

“[Texas Instruments] reported better results and guidance, partly because management overestimated the impact of China’s shutdown by ~10% [second-quarter] Sales (~$500 million), and thanks in part to solid automotive and industrial demand,” Rolland wrote in a note to customers, adding that April started off weak, but the full month May and June both showed improvement.

In addition, Texas Instruments (TXN) says Personal Electronics, which includes handheld devices, is a weak area, but outside of that, its business is strong.

Rolland noted that supply is still “somewhat limited,” but the company is on track to grow its Richardson, Texas mall in the third quarter and several other malls, including Lehi, Utah in 2023 and one in Sherman, Texas by 2025.

Benchmark analyst Cody Acree reiterated the company’s buy rating and $205 price target on Texas Instruments (TXN), noting that the company was more “optimistic” than when it reported first-quarter results.

“What started off was a weak start … in April, then saw an increase in activity in May and June and what appeared to be a continued pace until,” Acree writes. July,” Acree wrote.

Several other semiconductor stocks rose on the back of Texas Instruments (TXN) Fed results and actions, including ON Semiconductor (NASDAQ:ABOVE), Nvidia (NASDAQ:NVDA), Advanced Microphone Device (NASDAQ:AMD), increased by 8%, 8.5% and 6%, respectively.

Micron (MU), Analog Devices (ADI) and NXP Semiconductors (NXPI) also saw gains of 4% or more, while Broadcom (AVGO), Intel (INTC) and Qualcomm (QCOM) increased by more than 3%.

Qualcomm (QCOM) To be expected to report third-quarter financial results after the close of the transaction.

Last week, investment firm UBS said Texas Instruments (TXN) may report second-quarter revenue and earnings that beat Wall Street estimates, cites the company’s proprietary Proof Lab.

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