(Bloomberg) — Texas Instruments Inc. (TXN), a key chipmaker for producers of cars and factory equipment, tumbled in late trading after stoking fears that a tariff-fueled surge in demand will be short-lived.
Most Read from Bloomberg
Though the company issued a third-quarter forecast that beat most estimates, the outlook was more guarded than some investors had anticipated. The stock fell further during a conference call, when executives struggled to win over analysts who said the company’s tone had become increasingly negative.
The main concern is whether tariffs and trade disputes will hurt a sales resurgence that’s still in the early stages. While revenue jumped 16% last quarter, executives acknowledged that they didn’t know how much of that came from tariff-related “pull in” — customers making purchases to get out ahead of the levies.
“We have 100,000 customers,” Chief Financial Officer Rafael Lizardi said in an interview. “We don’t really know.”
The shares fell more than 11% in late trading following the report. They had benefited from a broader rally by semiconductor-related stocks this year, sending them up 15% through the close.
Revenue will be $4.45 billion to $4.8 billion in the third quarter, the company said. Though the average analyst estimate was $4.57 billion, some projections reached $4.8 billion. Profit in the period will be roughly $1.48 a share, slightly below the average estimate.
At the midpoint of its forecast, sales will grow 11% this quarter — a deceleration from the previous period. Still, the chipmaker remains confident that it will eventually top its previous peak of $20 billion in annual revenue, Lizardi said.
“We are very confident in our strategy,” he said. “We think our opportunities are greater than our challenges.”
During the call, executives said they saw strong orders early in the second quarter, with some customers likely adding inventory to guard against the tariff impact. Since then, levels have returned to what’s expected for a normal recovery period, they said.
Analysts repeatedly asked management about a perceived shift toward a more pessimistic view of demand. The company expressed confidence that all their markets — apart from automotive — are improving.
“Automotive has not recovered yet,” Chief Executive Officer Haviv Ilan said.
Source: Texas Instruments Plunges After Forecast Fuels Tariff Fears
