Texas Instruments Incorporated (TXN) | Investment Case

1. Company Snapshot

1.a. Company Description

Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide.It operates in two segments, Analog and Embedded Processing.The Analog segment offers power products to manage power requirements in various levels using battery-management solutions, DC/DC switching regulators, AC/DC and isolated controllers and converters, power switches, linear regulators, voltage supervisors, voltage references, and lighting products.

This segment also provides signal chain products that sense, condition, and measure signals to allow information to be transferred or converted for further processing and control for use in end markets, including amplifiers, data converters, interface products, motor drives, clocks, and sensing products.The Embedded Processing segment offers microcontrollers that are used in electronic equipment; digital signal processors for mathematical computations; and applications processors for specific computing activity.This segment offers products for use in various markets, such as industrial, automotive, personal electronics, communications equipment, enterprise systems, and calculators and other.

The company also provides DLP products primarily for use in projectors to create high-definition images; calculators; and application-specific integrated circuits.It markets and sells its semiconductor products through direct sales and distributors, as well as through its website.Texas Instruments Incorporated was founded in 1930 and is headquartered in Dallas, Texas.

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1.b. Last Insights on TXN

Texas Instruments' recent performance was driven by recovering industrial, auto, and data center demand, supporting revenue growth despite cost pressures. The company's Q4 results were lackluster, but strong Q1 guidance and surging data center demand drove shares up over 8%. Data center revenue grew 70% year-over-year, now comprising 9% of total revenue, with management expecting continued momentum and above-average margins. Additionally, the company's free cash flow nearly doubled year-over-year to $2.94B, fueled by lower CapEx and CHIPS Act incentives, positioning the company for enhanced shareholder returns.

1.c. Company Highlights

Last Price	226.12
Change Percentage	0.49%
Open	224.24
Previous Close	225.01
Market Cap ( Millions)	205458
Volume	2378940
Year High	228.84
Year Low	139.95
M A 50	182.79
M A 200	184.18

FCF Yield	1.27%
Dividend Yield	2.46%
ROE	30.44%
Debt / Equity	86.33%
Net Debt / EBIDTA	131.16%
Price To Book	12.63
Price Earnings Ratio	41.1
Price To FCF	78.93
Price To sales	11.62
EV / EBITDA	26.21

2. Texas Instruments' Q4 2025 Earnings: A Strong Performance

Texas Instruments reported fourth-quarter 2025 revenue of $4.4 billion, representing a 7% sequential decrease but a 10% increase year-over-year. The company's gross profit was $2.5 billion, or 56% of revenue, while operating profit was $1.5 billion, up 7% from the year-ago quarter. Net income was $1.2 billion, or $1.27 per share, slightly below estimates of $1.29. Analog revenue grew 14% year-over-year, driven by strength in data center, industrial, and automotive markets.

Publication Date: Feb -02

                                    📋 Highlights
                                    Revenue Growth::
                                                Q4 2025 revenue of $4.4B showed a 10% YoY increase but a 7% sequential decline.
Analog Revenue Surge::
                                                Analog revenue grew 14% YoY, outpacing embedded processing’s 8% growth.
Data Center Expansion::
                                                Data center revenue jumped 70% YoY, despite a mid-single-digit sequential dip.
Profitability::
                                                Gross margin held at 56% ($2.5B), with operating profit of $1.5B (+7% YoY) and net income of $1.2B.
Capital Returns::
                                                Returned $6.5B to owners over 12 months and raised dividends by 4% in Q4.

                                

Segment Performance

The company's end markets have been reorganized to include data center, which grew around 70% year-over-year and mid-single digits sequentially. Industrial and automotive markets increased by high teens and upper single digits year-over-year, respectively. The data center business is a growth area, with analog and embedded parts seeing opportunities. The company plays across different sockets in data center and expects to expand its opportunity in the coming years.

Outlook and Guidance

For the first quarter of 2026, the company expects revenue in the range of $4.32 billion to $4.68 billion and earnings per share to be in the range of $1.22 to $1.48. The company guides for low single-digit growth in Q1, driven by orders, particularly in data center. The company assumes a low single-digit decline in pricing in 2026, and there are no plans for a step-function increase.

Capital Management and Investments

The company generated $2.3 billion in cash flow from operations and returned $6.5 billion to owners in the past twelve months. The company increased its dividend per share by 4% in the fourth quarter, marking its twenty-second consecutive year of dividend increases. CapEx for 2026 is expected to be between $2 and $3 billion, with depreciation expected to be $2.2 to $2.4 billion.

Valuation and Growth Prospects

With a P/E Ratio of 39.18 and an expected revenue growth rate of 10.1% next year, the company's valuation appears to be reasonable. The Dividend Yield is 2.58%, providing a relatively stable source of return. The company's ability to adjust to market scenarios, with the ability to manage loadings and inventory, positions it well for future growth. Analysts' estimates suggest a positive outlook for the company, driven by its strong performance in data center and industrial markets.

3. NewsRoom

Texas Instruments: The Long Game Is Finally Taking Shape

Feb -02

Source: seekingalpha.com

Market Today: Warsh Pick Roils Metals; GameStop, AmEx, Disney

Jan -30

Source: gurufocus.com

Why Texas Instruments Stock Was a Monster Winner This Week

Jan -30

Source: fool.com

Micron Stock Hits Record High -- Insiders Are Selling

Jan -30

Source: gurufocus.com

First Look: Fed pick, Apple iPhone boom, Tesla pivot, metals swing

Jan -30

Source: gurufocus.com

AE Wealth Management LLC Acquires 11,208 Shares of Texas Instruments Incorporated $TXN

Jan -30

Source: defenseworld.net

Alpha Cubed Investments LLC Has $15.90 Million Position in Texas Instruments Incorporated $TXN

Jan -30

Source: defenseworld.net

Why Texas Instruments' 2026 Outlook Has Wall Street Re-Rating It

Jan -29

Source: marketbeat.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.24%)

6. Segments

Analog

Expected Growth: 8.5%

Texas Instruments’ Analog segment growth is driven by increasing demand for industrial automation, automotive electrification, and 5G infrastructure. Growth is also fueled by the rising adoption of IoT devices and the need for energy-efficient solutions.

Embedded Processing

Expected Growth: 8.4%

Growing demand for autonomous and electric vehicles, increasing adoption of Industry 4.0, and rising need for efficient computing and data processing drive the growth of Texas Instrument’s Embedded Processing segment.

Other

Expected Growth: 4.5%

Texas Instruments’ Other segment is driven by growth in industrial and automotive applications, increasing demand for analog semiconductors, and expanding presence in emerging markets.

7. Detailed Products

Analog and Embedded Processing

A wide range of analog and embedded processing products, including data converters, amplifiers, interface products, and microcontrollers.

Connectivity

A variety of connectivity products, including Wi-Fi, Bluetooth, and Ethernet solutions.

DLP Products

Digital Light Processing (DLP) technology-based products, including DLP chips, development kits, and software.

Power Management

A range of power management products, including power converters, battery management, and power amplifiers.

Semiconductors

A broad portfolio of semiconductor products, including logic, analog, and microcontrollers.

Software and Tools

A range of software and development tools, including code generation, debugging, and simulation tools.

Wireless Connectivity

A range of wireless connectivity products, including Wi-Fi, Bluetooth, and other wireless technologies.

8. Texas Instruments Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Texas Instruments Incorporated has a moderate threat of substitutes due to the presence of alternative products and technologies in the semiconductor industry.

Bargaining Power Of Customers

Texas Instruments Incorporated has a low bargaining power of customers due to its strong brand reputation and diversified customer base.

Bargaining Power Of Suppliers

Texas Instruments Incorporated has a moderate bargaining power of suppliers due to the presence of multiple suppliers in the industry.

Threat Of New Entrants

Texas Instruments Incorporated has a low threat of new entrants due to the high barriers to entry in the semiconductor industry.

Intensity Of Rivalry

Texas Instruments Incorporated operates in a highly competitive industry with intense rivalry among established players.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	39.91%
Debt Cost	3.95%
Equity Weight	60.09%
Equity Cost	8.92%
WACC	6.93%
Leverage	66.42%

11. Quality Control: Texas Instruments Incorporated passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

KLA

A-Score: 5.6/10

Value: 0.8

Growth: 8.3

Quality: 7.9

Yield: 2.0

Momentum: 9.5

Volatility: 5.0

1-Year Total Return ->

Broadcom

A-Score: 5.5/10

Value: 0.0

Growth: 8.3

Quality: 8.2

Yield: 3.0

Momentum: 10.0

Volatility: 3.7

1-Year Total Return ->

Lam Research

A-Score: 5.5/10

Value: 0.8

Growth: 8.1

Quality: 8.3

Yield: 2.0

Momentum: 9.5

Volatility: 4.3

1-Year Total Return ->

Applied Materials

A-Score: 5.3/10

Value: 1.6

Growth: 7.9

Quality: 8.1

Yield: 1.0

Momentum: 8.5

Volatility: 5.0

1-Year Total Return ->

Texas Instruments

A-Score: 4.5/10

Value: 1.0

Growth: 3.6

Quality: 7.1

Yield: 6.0

Momentum: 3.0

Volatility: 6.3

1-Year Total Return ->

Microchip Technology

A-Score: 3.3/10

Value: 2.7

Growth: 1.9

Quality: 3.7

Yield: 5.0

Momentum: 2.5

Volatility: 4.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

19.33%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.93%

Texas Instruments Incorporated - US8825081040

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TXN

1.c. Company Highlights

Higher Yield

Less Volatile

Expensive

Earnings Beats

Revenues Beats

Medium Volatility

Average Quality

Better Quality

2. Texas Instruments' Q4 2025 Earnings: A Strong Performance

Segment Performance

Outlook and Guidance

Capital Management and Investments

Valuation and Growth Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.24%)

6. Segments

Analog

Expected Growth: 8.5%

Embedded Processing

Expected Growth: 8.4%

Other

Expected Growth: 4.5%

7. Detailed Products

Analog and Embedded Processing

Connectivity

DLP Products

Power Management

Semiconductors

Software and Tools

Wireless Connectivity

8. Texas Instruments Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Texas Instruments Incorporated passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

226.28$

Current Price

226.28$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA