Texas Instruments and Analog Devices at Citi TMT Conference

Both Texas Instruments (TXN) and Analog Devices (ADI) attended Citi TMT Conference last week. Let me share some of my notes from these calls.

TXN stock reacted negatively a bit after management highlighted they are not seeing a “snapback” in the current recovery:

…it's not quite happening a snapback as maybe some people anticipated or as other recoveries have happened. So that part is a little different. And some of that, we think, could be due to uncertainties at the macro level. Some of that, as I mentioned, is because automotive is not quite recovering like others, but we are in recovery. It's just not quite like it's been in other places now.

Similarly, ADI also talked about the uncertainties they are sensing in their end markets:

it's uncertainty both ways because it's the tariff and trade uncertainty. And for us, and we've talked about this before, the tariff and trade uncertainty is less about the direct impact to us, right? The impact of tariffs as they exist today is pretty nominal for us. But what it does matter is what is it doing to GDP and what is it doing to demand creation/demand destruction because our products are in a lot of end markets where there are tariffs already and does that drive down demand? And what does that do to GDP? So that's certainly an uncertainty, and that clouds the picture because two of the largest economies in the world, they're still in negotiations with our administration around the trade policies, right? So we still don't yet know where China and India will land on the spectrum. We've still got some potential even additional tariffs in our space specifically to come, right? So I think that's a level of uncertainty. Second piece, I mentioned a little bit, if you look at which for us, industrial this is a really good barometer for us. the PMIs have been choppy, right? They're hovering around 50, but we've had a couple of months of contractionary PMI. So you got to pay attention to that because it does -- has historically been a leading indicator for where we're headed. The other piece is uncertainty around SAAR, right? The number of vehicles are going to be produced. You look at the pressure, the rebates being removed in the U.S., the tariffs and the impact they're having on auto demand. And it's unclear what auto production plans might look like in '26.

Despite these uncertainties, ADI management pointed out how they’re still considerably below their peaks which means the recovery is likely to continue:

if you think about it from a cycle perspective, we were out in front of reducing inventories pretty quickly. So we've been reducing inventory, both in our channel and at our customers for the better part of 2 years now. And I think that positions us really well because we are at some of the lowest channel levels we've ever been. We're well below our sort of historical 7- to 8-week channel model. So we feel good about where we're positioned there.

…And I still think there's room to run because if you think about the sort of the consumption line, assuming that, that industrial business would typically grow 5% or 6% CAGR over any period of time, you run that line out from pick your starting point to where we are today, even with the strength of the industrial recovery, we'll still be below that trend line. We're also still 30% below our peak in industrial. And I think that's an important thing. So I think that we continue to see room for us to grow given we're below that -- still below the trend line and below our peaks. So I think that's an important piece on the industrial side. And other than auto, all of our businesses are still below their peak values.

TXN talked about low lead times and given their substantial inventory, they can maintain very low lead time throughout the recovery:

…our lead times remain really low. And that is by design. So we have capacity in place. We have inventory in place. We have new processes internally where we are building more buffers than we used to before. So our business is largely a catalog-based business, not entirely, of course. But largely, more than half of our revenue is on catalog-based business, so we can build to stock. And so even though we're already in an upward progress with the cycle, we can keep those lead times short. And we expect to continue to do that through the upturn. If we are successful in our strategy, we will keep those lead time short through the upturn.

Market’s enthusiasm for these analog players have dissipated a bit given the liberation day likely obfuscated the true nature of this current recovery. While TXN didn’t provide any guide for 2026, they did mention in the conference that it is “more likely than not” that the revenue will be closer to the lower end of their revenue guide in 2026 (~$20 Billion) which would prompt them to do capex closer to $2 Billion next year (they guided a $2-5 Billion range earlier dependent on various revenue scenarios)

Both companies kind of told the same macro story: industrial is back, auto is messy, China is where the growth actually showed up, and tariffs/politics are the fog machine. Despite "China for China" localization efforts, China has been the strongest geography for both companies in 2025. Both noted China was the first region into the downturn and the first out. Nonetheless, visibility remains low given the macro uncertainties.

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