NXP Rallies After Stronger Auto Market Bolsters Forecast

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(Bloomberg) — NXP Semiconductors NV jumped in late trading after giving an upbeat revenue forecast, a sign the chipmaker is bouncing back from a prolonged auto industry slump and tariff uncertainties.

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Revenue in the second quarter will be $3.35 billion to $3.55 billion, the Dutch company said in a statement on Tuesday. This beats the average analyst estimate of $3.27 billion, according to data compiled by Bloomberg.

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“The momentum we have built is expected to accelerate through the remainder of 2026,” Chief Executive Officer Rafael Sotomayor said in the statement.

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NXP shares soared more than 10% in extended US trading after the report was released. They had been up 6.1% this year through the close.

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Analog chipmakers such as NXP are slowly emerging from a two-year slump in demand. Customers have largely worked through high inventories they’d built up after a chip shortage during the Covid-19 pandemic. NXP supplies components to the automotive industry, which makes up more than half the company’s revenue. 

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NXP said its adjusted gross margin for the current quarter will be 57.5% to 58.5%. Analysts projected 57.6%.

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Revenue in the first quarter rose 12% to $3.18 billion, the company said. That compared with an average analyst estimate of $3.15 billion.

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Last week, peers Texas Instruments Inc. and STMicroelectronics NV also reported better-than-expected numbers, helped by booming spending on data centers in the global artificial intelligence race. Analog chips convert real-world inputs into electronic signals and are used in a wide range of devices.

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Demand “appears to be improving on all industrial fronts while auto is hanging in better than feared,” TD Cowen analysts including Joshua Buchalter wrote in a reaction to NXP’s earnings. “It seems the revenue engine of the company is finally reigniting.”

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For the first time and in a surprise to analysts, NXP disclosed income it is making from data centers. 

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The segment will rise from $200 million in 2025 to more than $500 million in 2026, CEO Sotomayor said in a call with analysts after earnings. 

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NXP is focused on the “control plane” of the data center — the embedded systems that optimize data flow, cooling, and energy use. NXP has ramped up its business in the space with 20 to 25 products that can be used in data centers, Sotomayor said, and he expects the addressable market to grow about 10% to 11% per year.

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—With assistance from Henry Ren.

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(Updates with analyst commentary and data center revenue details.)

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