Texas Instruments stock: A quiet move stretches an already full valuation
TXN stock analysis and fair value · bull and bear case
The call: SageNoodle rates Texas Instruments Overvalued: base-case fair value USD 215 against a price of USD 282, 24% below the quote on a 12-18 months horizon. Texas Instruments stock gained 1.6% today without new company disclosures, retail volume, or fresh macro headlines, confirming that day-to-day noise rather than a structural fundamental shift is driving current trading.
Texas Instruments stock ticked up 1.6% today without fresh corporate filings or news catalysts. At $270.87, the shares already price in an aggressive cyclical recovery, keeping the stock overvalued.
Valuation as of 22 Sept 2026 · Quote currency: USD. Latest quote: Fri, 09 Oct 2026 17:01:45 GMT.
Written with AI from the linked sources and reviewed by a SageNoodle editor. How we work.
Latest quote
USD 282.23
At publication
USD 270.87
Fair value
USD 215.00
Upside
-23.8%
P/E at publication
35.5x
EV/EBITDA
25.8x
FCF yield
2.8%
ROIC 19.4% · Horizon 12-18 months
Why Texas Instruments (TXN) stock is mispriced
- 01
Texas Instruments stock gained 1.6% today without new company disclosures, retail volume, or fresh macro headlines, confirming that day-to-day noise rather than a structural fundamental shift is driving current trading.
- 02
Operational progress is tangible—with first-half 2026 operating cash flow reaching $4,223 million and capex moderating to $1,190 million—but valuation is demanding at over 35x normalized earnings.
- 03
Current pricing at $270.87 leaves little margin of safety against potential cyclical demand slowdowns across industrial and automotive end markets.
What Texas Instruments does and how it makes money
Texas Instruments Incorporated (TXN) designs and manufactures analog and embedded processing semiconductors for global electronic equipment manufacturers. Analog chips process real-world signals like sound, temperature, and electrical power, while embedded processors serve as specialized digital controllers. The business operates primarily through two reportable segments: Analog, which generates the vast majority of revenue and operating profit, and Embedded Processing. The company maintains an internal manufacturing strategy heavily centered on 300mm wafer fabrication, enabling cost efficiencies over smaller-geometry or fabless competitors. Geographically, customer end demand is led by the United States (39% of second-quarter 2026 revenue) and China (22%), followed by EMEA and other Asian regions.
For the financial history and all coverage, see TEXAS INSTRUMENTS INC (TXN) company research.
Source documents
What moved Texas Instruments stock today?
Texas Instruments stock gained 1.6% to reach $270.87 today, trading in the upper half of its 52-week range of $152.73 to $334.03. An investor scanning the wires for a major corporate announcement or a sudden research upgrade will come away empty-handed. The company published no SEC regulatory disclosures today, public forum attention remains negligible, and no fresh news catalysts emerged.
The most proximate company event occurred days earlier, when Texas Instruments signaled a 7% hike in its quarterly dividend to $1.52 per share ($6.08 annualized), alongside routine Form 4 director stock unit grants. Today's price action appears to reflect steady institutional positioning and general semiconductor sector momentum rather than any newly released financial information.
What the underlying fundamentals actually show
While price action today lacks news backing, the company's financial results show a real cyclical recovery underway. According to Texas Instruments' Form 10-Q for the quarter ended June 30, 2026, revenue grew to $5,463 million from $4,448 million in the second quarter of 2025. Operating profit rose 47.8% year-over-year to $2,310 million, fueled by strong operating leverage in the Analog division.
Cash flow dynamics have improved even more markedly as heavy capital outlays ease. For the first six months of 2026, capital expenditures were $1,190 million, down from $2,428 million in the first six months of 2025. Over the same period, cash flow from operations climbed to $4,223 million, aided by $1,104 million in direct proceeds from U.S. CHIPS Act incentives and another $301 million in investment tax credits.
Why the long-term thesis and fair value remain unchanged
A quiet 1.6% move does nothing to change our structural fair value estimate of $215.00 per share. Texas Instruments is undeniably a high-return, well-run enterprise. Its extensive catalog of proprietary analog designs and internal 300mm manufacturing infrastructure give it lasting structural cost advantages.
However, at $270.87, Texas Instruments stock trades at an enterprise multiple that prices in uninterrupted margin expansion well beyond normal cyclical peak levels. With total long-term debt standing at $12,903 million as of June 30, 2026, against cash and short-term investments of $7,001 million, net debt remains meaningful at roughly $7.05 billion. Investors paying current prices are accepting an uncomfortably compressed risk premium.
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Texas Instruments revenue, margins and cash flow
Revenue (USD, billions)
Margins (%)
Free cash flow (USD, billions)
Estimated ROIC (%)
Net debt (USD, billions)
Monetary values are in USD; revenue, FCF and net debt are in billions; EPS is per share. Missing values appear as gaps and “Not available.” Source: SEC EDGAR XBRL filings, latest restated values; quarterly cash flow derived from year-to-date figures; Q4 = fiscal year minus nine months. ROIC is NOPAT (21% tax) over debt plus equity.
| Period | Revenue | Gross % | Op % | FCF | EPS | ROIC % | Net debt |
|---|---|---|---|---|---|---|---|
| FY2016 | 13.4 | 61.8 | 36.3 | 4.08 | 3.48 | 27.2 | 2.46 |
| FY2017 | 15.0 | 64.3 | 40.7 | 4.67 | 3.61 | 33.3 | 2.42 |
| FY2018 | 15.8 | 65.1 | 42.5 | 6.06 | 5.59 | 37.7 | 2.63 |
| FY2019 | 14.4 | 63.7 | 39.8 | 5.80 | 5.24 | 30.7 | 3.37 |
| FY2020 | 14.5 | 64.1 | 40.8 | 5.49 | 5.97 | 29.1 | 3.69 |
| FY2021 | 18.3 | 67.5 | 48.8 | 6.29 | 8.26 | 33.6 | 3.11 |
| FY2022 | 20.0 | 68.8 | 50.6 | 5.92 | 9.41 | 34.4 | 5.68 |
| FY2023 | 17.5 | 62.9 | 41.9 | 1.35 | 7.07 | 20.6 | 8.26 |
| FY2024 | 15.6 | 58.1 | 34.9 | 1.50 | 5.20 | 14.2 | 10.4 |
| FY2025 | 17.7 | 57.0 | 34.1 | 2.60 | 5.45 | 15.7 | 10.8 |
What Texas Instruments management has said
Margins
Paraphrased commentary
Management noted in the Form 10-Q that centralized manufacturing and support costs, including fab depreciation, continue to be charged to operating segments on a per-unit basis.
Texas Instruments fair value: bear, base and bull scenarios
Dot marks the latest quote of USD 282.23.
Bear
25%USD 165
Discounted cash flow and historical trough P/E multiple (22x trough EPS)
Enterprise value USD 158.85B − net claims USD 7.05B
Equity value USD 151.80B ÷ 0.920B diluted shares
- Normalized EPS
- $7.50
- Target P/E
- 22.0x
A protracted industrial inventory digestion and slower automotive demand compress Analog margins, pulling normalized earnings back toward cyclical trough levels.
Base
55%USD 215
Normalized mid-cycle earnings multiple (26x normalized EPS)
Enterprise value USD 204.85B − net claims USD 7.05B
Equity value USD 197.80B ÷ 0.920B diluted shares
- Normalized EPS
- $8.27
- Target P/E
- 26.0x
Mid-cycle revenue growth continues at high single digits. Moderating capex and 300mm manufacturing cost efficiencies keep free cash flow conversion strong, supporting sustained dividend growth.
Bull
20%USD 285
Cyclical peak multiple (30x peak EPS)
Enterprise value USD 269.25B − net claims USD 7.05B
Equity value USD 262.20B ÷ 0.920B diluted shares
- Normalized EPS
- $9.50
- Target P/E
- 30.0x
Broad-based reacceleration in industrial and automotive content, paired with faster CHIPS Act disbursements and high fab utilization, drives margins above historical peak levels.
Texas Instruments (TXN) stock: bullish vs bearish case
Bull case
- Proprietary 300mm wafer fabrication gives TXN an enduring unit-cost edge over 200mm competitors in analog power and signal chains.
- Federal CHIPS Act grants and tax credits provide a non-dilutive liquidity cushion as heavy capex outlays roll off.
- Long product life cycles and broad customer diversification limit catastrophic obsolescence risks.
Bear case
- At $270.87, the stock trades well above its historical normalized valuation multiples, offering little safety margin.
- Substantial exposure to China (22% of revenue) leaves the company exposed to geopolitical tensions and domestic Chinese analog chip substitution.
- Depreciation expenses from newly built fabrication facilities will remain an ongoing drag on gross margins if plant utilization rates decline.
Texas Instruments stock risks
| Risk | Severity | Probability | Rationale |
|---|---|---|---|
| Industrial and Automotive Cyclical Slump | Medium | Medium | Analog demand is levered to global industrial capital expenditure and vehicle production rates. Any extended inventory correction can swiftly compress utilization and operating profit. |
| Valuation Multiple Compression | High | High | Trading near 35x trailing earnings and an 80% premium to its historical floor multiples, TXN shares face sharp downside risk if broader tech sector multiples contract. |
| Geopolitical and China Trade Restrictions | Medium | Medium | With 22% of second-quarter 2026 revenue linked to Chinese headquarters, rising trade barriers or localized semiconductor self-sufficiency could diminish Texas Instruments' addressable market. |
Texas Instruments catalysts: what could move TXN stock
- 2026-10-22Neutral
Q3 2026 Earnings Release
Investors will look for quarterly revenue trajectory, industrial order backlog rates, and forward guidance for fab depreciation.
- 2026-11-15Bullish
Implementation of Increased Quarterly Dividend
Execution of the recently announced dividend increase to $1.52 per share tests ongoing free cash flow generation.
Texas Instruments fair value history
| Period | Fair value | Verdict | Note |
|---|---|---|---|
| Q2 FY2026 | USD 215 | Overvalued | Initial SageNoodle valuation. Strong revenue, margin and cash-flow recovery supports higher normalized earnings, but the $258.82 price exceeds the $215 base-case value. |
| Spotlight (2026-09-22) | USD 215 | Overvalued | Unchanged fair value of $215.00 following minor price appreciation to $270.87 with no new fundamental company disclosures. |
Texas Instruments news
TXN Starts Raising Prices: Can Higher ASPs Boost Profits in 2026?
The headline reports that Texas Instruments has started raising prices and examines whether higher average selling prices can lift profits in 2026. It does not disclose the size, scope or customer acceptance of the increases.
Why this matters
Successful pricing would improve revenue per unit and could support gross margin and operating cash flow without requiring equivalent volume growth. The absence of disclosed price increases, elasticity or volume effects means the impact cannot yet be incorporated into the existing $215 fair value with confidence.
Texas Instruments Incorporated Benefits from AI without Being Pure Play AI
The headline presents Texas Instruments as benefiting from artificial-intelligence demand while remaining diversified beyond pure-play AI exposure. It provides no quantified AI-related revenue, order growth or capacity allocation.
Why this matters
Incremental AI-linked demand could broaden the recovery opportunity and reduce dependence on a single end market, potentially supporting utilization and margins. Without disclosed exposure or customer commitments, the headline changes the opportunity set more than the current valuation evidence.
Texas Instruments: The Upcycle Everyone Waited For Might Finally Be Here
The headline argues that a semiconductor upcycle may finally be emerging for Texas Instruments. No supporting figures, timing, end-market data or company guidance are provided in the supplied headline.
Why this matters
A sustained upcycle could raise utilization, revenue and operating leverage, improving normalized earnings and free cash flow. Because the claim is not quantified here, it supports monitoring the recovery thesis but does not by itself justify moving fair value above the prior $215 estimate.
More on TEXAS INSTRUMENTS INC
Related reports
- Texas Instruments’ Margin Recovery Meets a 39.4x P/E
Earnings Update · 11 Sept 2026
Quarterly earnings
Texas Instruments stock: common questions
- Is Texas Instruments (TXN) stock undervalued or overvalued?
- SageNoodle rates Texas Instruments Overvalued: base-case fair value USD 215 against a price of USD 282, 24% below the quote on a 12-18 months horizon. Texas Instruments stock gained 1.6% today without new company disclosures, retail volume, or fresh macro headlines, confirming that day-to-day noise rather than a structural fundamental shift is driving current trading.
- What is Texas Instruments's fair value?
- Bear USD 165 (25% probability, Discounted cash flow and historical trough P/E multiple (22x trough EPS)); Base USD 215 (55% probability, Normalized mid-cycle earnings multiple (26x normalized EPS)); Bull USD 285 (20% probability, Cyclical peak multiple (30x peak EPS)). Mid-cycle revenue growth continues at high single digits. Moderating capex and 300mm manufacturing cost efficiencies keep free cash flow conversion strong, supporting sustained dividend growth.
- What is the bull case for TXN stock?
- Proprietary 300mm wafer fabrication gives TXN an enduring unit-cost edge over 200mm competitors in analog power and signal chains. Federal CHIPS Act grants and tax credits provide a non-dilutive liquidity cushion as heavy capex outlays roll off. Long product life cycles and broad customer diversification limit catastrophic obsolescence risks.
- What is the bear case for TXN stock?
- At $270.87, the stock trades well above its historical normalized valuation multiples, offering little safety margin. Substantial exposure to China (22% of revenue) leaves the company exposed to geopolitical tensions and domestic Chinese analog chip substitution. Depreciation expenses from newly built fabrication facilities will remain an ongoing drag on gross margins if plant utilization rates decline.
- What are the biggest risks to Texas Instruments stock?
- Industrial and Automotive Cyclical Slump (Medium severity): Analog demand is levered to global industrial capital expenditure and vehicle production rates. Any extended inventory correction can swiftly compress utilization and operating profit. Valuation Multiple Compression (High severity): Trading near 35x trailing earnings and an 80% premium to its historical floor multiples, TXN shares face sharp downside risk if broader tech sector multiples contract. Geopolitical and China Trade Restrictions (Medium severity): With 22% of second-quarter 2026 revenue linked to Chinese headquarters, rising trade barriers or localized semiconductor self-sufficiency could diminish Texas Instruments' addressable market.
- What could move TXN stock next?
- 2026-10-22: Q3 2026 Earnings Release. Investors will look for quarterly revenue trajectory, industrial order backlog rates, and forward guidance for fab depreciation. 2026-11-15: Implementation of Increased Quarterly Dividend. Execution of the recently announced dividend increase to $1.52 per share tests ongoing free cash flow generation.
Company reference pages
Browse company filings and market quotes to check the latest information. These pages update over time and are separate from the documents cited in this report.