Texas Instruments TXN

NASDAQ TXN

$268.70 +9.88 (+3.82%)

At close: Sep 11, 2026 · 4:00 PM EDT

Key Stats

Market Cap244.95 Bn

P/E40.71

P/S12.59

Div. Yield0.02

Total Debt (Qtr)15.20 Bn

Revenue Growth (1y) (Qtr)22.82

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About

Texas Instruments Inc designs and manufactures semiconductors that it sells to electronics designers and manufacturers worldwide. The company operates with a focus on analog and embedded processing products, leveraging over nine decades of experience in semiconductor innovation. Headquartered in Dallas, Texas, Texas Instruments Inc maintains design, manufacturing, or sales operations in more than 30 countries. Texas Instruments Inc generates revenue primarily through the…

Texas Instruments Inc generates revenue primarily through the sale of semiconductor products used in a wide range of electronic applications. In 2025, the company reported $17.68 billion in revenue, with its Analog segment contributing $14.01 billion, the Embedded Processing segment contributing $2.70 billion, and the Other segment contributing $979 million. Its products are essential for converting and amplifying signals, managing and distributing power, interfacing with devices, and processing data across industrial, automotive, data center, personal electronics, and communications equipment markets.

The company operates through the following segments: Analog, Embedded Processing, and Other.

Analog: This segment generated $14.01 billion of revenue in 2025, representing approximately 79% of total revenue. Analog semiconductors condition, amplify, and convert real-world signals such as sound, temperature, pressure, or light into digital data for further processing. These products are also critical for managing power in electronic systems by converting, distributing, storing, discharging, isolating, and measuring electrical energy, whether the equipment is plugged into a wall or using a battery.
Embedded Processing: This segment generated $2.70 billion of revenue in 2025, accounting for about 15% of total revenue. Embedded Processing products serve as the digital "brains" of electronic equipment, handling specific tasks and optimized for performance, power, and cost depending on the application. The product range includes microcontrollers, processors, wireless connectivity, and radar devices, with microcontrollers featuring a processor core, memory, and peripherals designed to control specific tasks and often integrate analog functionality.
Other: This segment generated $979 million of revenue in 2025 and includes revenue from DLP® products, primarily used to project high-definition images, calculators, and certain application-specific integrated circuits (ASICs). The DLP® trademark is a key brand within this segment, enabling high-quality image projection in various applications. Additionally, the Other segment includes items not used in evaluating segment performance, such as acquisition and integration charges, litigation expenses, environmental costs, and gains or losses from asset dispositions.

Texas Instruments Inc holds a strong position in the semiconductor industry due to four sustainable competitive advantages: a strong foundation in manufacturing and technology, a broad portfolio of analog and embedded processing products, extensive market channel reach, and product, market, and customer position diversity and longevity. These advantages are difficult to replicate and distinguish the company from its peers, enabling consistent free cash flow generation. The company operates in highly fragmented analog and embedded processing markets, facing competition from dozens of large and small suppliers, including broad-based and niche providers, as well as emerging companies, particularly in Asia.

Texas Instruments Inc serves over 100,000 customers globally, with a diverse base such that approximately half of its revenue comes from customers outside its top 50. The company sells through direct channels, including its website and a broad sales and marketing team, and to a lesser extent through distributors. In 2025, more than 80% of revenue was generated via direct sales, which include TI.com, enabling closer customer relationships and greater access to design projects. The company also offers customers the option to use a single worldwide distributor or a few region-specific distributors for order fulfillment.

Investment Thesis

▲ Bull case

Texas Instruments (TXN) is positioned to capitalize on the secular growth in AI-driven data center demand, which is not merely a cyclical rebound but a structural shift requiring sustained analog semiconductor content per server. The company’s Data Center segment grew ~90% year-over-year in Q1 FY26, with management emphasizing that this growth is underpinned by increasing power density demands in AI infrastructure, where TI’s analog chips—such as VRMs and power management ICs—are essential for voltage regulation and signal conditioning. Unlike competitors focused on leading-edge logic, TI’s strength lies in its broad analog portfolio and vertically integrated manufacturing, allowing it to supply both general-purpose and application-specific components at scale. The acquisition of Silicon Labs, targeting enhanced embedded wireless connectivity, will further expand TI’s addressable market in industrial IoT and data center edge devices, creating cross-selling opportunities that management did not fully quantify but hinted at through references to “leveraging internally owned technology.” With CapEx guided at $2 billion–$3 billion for 2026—partially allocated to internalizing back-end assembly and test—TI is de-risking supply chain bottlenecks while improving gross margin fall-through, which management guided at 75%–85% incremental. This operational leverage, combined with the company’s ability to modulate wafer starts in real time based on daily consumption, positions TXN to capture share gains as demand sustains, particularly given that Industrial end markets remain 15% below their 2022 peak despite 30%+ YoY growth, indicating significant room for expansion before reaching historical highs. The CHIPS Act incentives—already contributing $965 million to trailing-twelve-month free cash flow—provide a non-dilutive boost to cash generation, with remaining direct funding expected over coming years as milestones are met, effectively lowering the cost of capacity expansion. Management’s confidence in achieving $8 free cash flow per share for 2026, assuming no “false start,” is reinforced by the framework linking revenue growth to FCF per share: at $20 billion revenue, FCF per share reaches $8–$9, and at $22 billion, $9–$10. With Q1 FY26 revenue at $4.8 billion and Q2 guided to $5.0–$5.4 billion, the first-half run-rate suggests annualized revenue above $20 billion, making $8 FCF per share not just probable but conservative if demand continues to accelerate.

Texas Instruments (TXN) is positioned to capitalize on the secular growth in AI-driven data center demand, which is not merely a cyclical rebound but a structural shift requiring sustained analog semiconductor content per server. The company’s Data Center segment grew ~90% year-over-year in Q1 FY26, with management emphasizing that this growth is underpinned by increasing power density demands in AI infrastructure, where TI’s analog chips—such as VRMs and power management ICs—are essential for voltage regulation and signal conditioning. Unlike competitors focused on leading-edge logic, TI’s strength lies in its broad analog portfolio and vertically integrated manufacturing, allowing it to supply both general-purpose and application-specific components at scale. The acquisition of Silicon Labs, targeting enhanced embedded wireless connectivity, will further expand TI’s addressable market in industrial IoT and data center edge devices, creating cross-selling opportunities that management did not fully quantify but hinted at through references to “leveraging internally owned technology.” With CapEx guided at $2 billion–$3 billion for 2026—partially allocated to internalizing back-end assembly and test—TI is de-risking supply chain bottlenecks while improving gross margin fall-through, which management guided at 75%–85% incremental. This operational leverage, combined with the company’s ability to modulate wafer starts in real time based on daily consumption, positions TXN to capture share gains as demand sustains, particularly given that Industrial end markets remain 15% below their 2022 peak despite 30%+ YoY growth, indicating significant room for expansion before reaching historical highs. The CHIPS Act incentives—already contributing $965 million to trailing-twelve-month free cash flow—provide a non-dilutive boost to cash generation, with remaining direct funding expected over coming years as milestones are met, effectively lowering the cost of capacity expansion. Management’s confidence in achieving $8 free cash flow per share for 2026, assuming no “false start,” is reinforced by the framework linking revenue growth to FCF per share: at $20 billion revenue, FCF per share reaches $8–$9, and at $22 billion, $9–$10. With Q1 FY26 revenue at $4.8 billion and Q2 guided to $5.0–$5.4 billion, the first-half run-rate suggests annualized revenue above $20 billion, making $8 FCF per share not just probable but conservative if demand continues to accelerate.

▼ Bear case

Texas Instruments (TXN) faces significant near-term risks rooted in demand sustainability and inventory management dynamics that the market may be underestimating despite strong Q1 results. Management explicitly acknowledged that the “biggest question” for the second half is whether the current growth trajectory—particularly in Industrial and Data Center—can be sustained, referencing prior “false start” patterns where strong first-half performance faded in the second half due to macroeconomic or geopolitical headwinds. While Industrial grew over 30% year-over-year, Haviv Ilan noted that the segment remains 15% below its 2022 peak, suggesting the current rebound may reflect inventory replenishment rather than new organic demand, especially given the company’s own inventory days decreased to 209 from 222 sequentially, signaling a drawdown of stockpiles that could reverse if demand softens. The CFO’s commentary that inventory should “drift towards the lower end” during an upturn but “build upward during a downturn” implies that TXN is currently in a destocking phase, and any slowdown in customer consumption would trigger rapid inventory re-accumulation, pressuring margins and free cash flow. Furthermore, pricing remains flat year-over-year and sequentially, with management only suggesting potential price increases in the second half “if demand continues to behave like that,” indicating that pricing power is contingent on sustained demand strength—a condition not yet guaranteed. The acquisition of Silicon Labs introduces recurring quarterly charges of ~$17 million (as seen in Q1) that will persist until close in 2027, directly reducing GAAP profitability and complicating investor modeling, especially since management confirmed these costs will be steady post-close for years. Capital expenditures remain elevated at $2 billion–$3 billion for 2026, with a growing focus on internalizing back-end assembly and test; while strategically sound, this elevates fixed costs and depreciation (guided at $2.2–$2.4 billion for 2026), which could weigh on earnings if revenue growth decelerates. Finally, the company’s reliance on cyclical end markets—Automotive remained flat sequentially with China declining, and Personal Electronics was flat year-over-year—exposes TXN to sector-specific weaknesses that could offset gains in Industrial and Data Center, particularly if global manufacturing activity weakens or AI data center spending shifts from infrastructure buildout to utilization phases, reducing incremental analog chip demand.

Texas Instruments (TXN) faces significant near-term risks rooted in demand sustainability and inventory management dynamics that the market may be underestimating despite strong Q1 results. Management explicitly acknowledged that the “biggest question” for the second half is whether the current growth trajectory—particularly in Industrial and Data Center—can be sustained, referencing prior “false start” patterns where strong first-half performance faded in the second half due to macroeconomic or geopolitical headwinds. While Industrial grew over 30% year-over-year, Haviv Ilan noted that the segment remains 15% below its 2022 peak, suggesting the current rebound may reflect inventory replenishment rather than new organic demand, especially given the company’s own inventory days decreased to 209 from 222 sequentially, signaling a drawdown of stockpiles that could reverse if demand softens. The CFO’s commentary that inventory should “drift towards the lower end” during an upturn but “build upward during a downturn” implies that TXN is currently in a destocking phase, and any slowdown in customer consumption would trigger rapid inventory re-accumulation, pressuring margins and free cash flow. Furthermore, pricing remains flat year-over-year and sequentially, with management only suggesting potential price increases in the second half “if demand continues to behave like that,” indicating that pricing power is contingent on sustained demand strength—a condition not yet guaranteed. The acquisition of Silicon Labs introduces recurring quarterly charges of ~$17 million (as seen in Q1) that will persist until close in 2027, directly reducing GAAP profitability and complicating investor modeling, especially since management confirmed these costs will be steady post-close for years. Capital expenditures remain elevated at $2 billion–$3 billion for 2026, with a growing focus on internalizing back-end assembly and test; while strategically sound, this elevates fixed costs and depreciation (guided at $2.2–$2.4 billion for 2026), which could weigh on earnings if revenue growth decelerates. Finally, the company’s reliance on cyclical end markets—Automotive remained flat sequentially with China declining, and Personal Electronics was flat year-over-year—exposes TXN to sector-specific weaknesses that could offset gains in Industrial and Data Center, particularly if global manufacturing activity weakens or AI data center spending shifts from infrastructure buildout to utilization phases, reducing incremental analog chip demand.

Segments Breakdown of Revenue (2025)

Peer group

Peer Comparison

Companies in the Semiconductor Manufacturing

S.No.	Ticker	Company	match	Market Cap	P/E	P/S	Total Debt (Qtr)
1	TSM	Taiwan Semiconductor Manufacturing Co Ltd	primary	2,243.52 Bn	123.80	15.70	6.91 Bn
2	MU	Micron Technology Inc	primary	1,099.87 Bn	21.80	12.18	5.72 Bn
3	INTC	Intel Corp	primary	525.58 Bn	-46.96	9.22	50.54 Bn
4	TXN	Texas Instruments Inc	primary	244.95 Bn	40.71	12.59	15.20 Bn
5	ADI	Analog Devices Inc	primary	183.56 Bn	44.39	13.22	9.12 Bn
6	NXPI	NXP Semiconductors N.V.	primary	59.49 Bn	19.35	4.51	10.98 Bn
7	UMC	United Microelectronics Corp	primary	54.97 Bn	14.84	3.99	0.74 Bn
8	STMEF	STMicroelectronics N.V.	primary	46.45 Bn	46.08	3.55	1.96 Bn

Texas Instruments TXN

About

Investment Thesis

Concentration Risk Benchmark Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer Comparison

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