TenQ

The Texas Instruments story

Texas Instruments makes analog and embedded chips in its own factories, with the central question being whether recovering demand can turn its manufacturing expansion into sustained free cash flow per share growth.

Written from Texas Instruments's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $278.31share price, last close
  • $254.2Bmarket value
  • 22/36TenQ Score checks passed
  • 20.6%growth a year the price assumes

The story in brief

  • Demand has recovered. Revenue reached $5.46 billion in the quarter to June 2026, rising 13% sequentially and 23% from a year earlier, led by industrial, data center and automotive demand.
  • Factories define the strategy. TI allocated about $24 billion to capital expenditures from 2016 to 2025 and described its elevated spending cycle as nearing completion in its annual report.
  • Cash definitions matter. Over the last twelve months, TI reported $6.5 billion of free cash flow including CHIPS Act incentive proceeds, versus $5.4 billion excluding those proceeds.

What drives the business

  • Texas Instruments centers its business on internally manufactured analog and embedded chips, with an unpackaged chip made on a 300mm wafer costing about 40% less than one made on a 200mm wafer.
  • Analog products manage power and convert physical signals into usable information, generating $14.01 billion of revenue in 2025, about 79% of TI's total.
  • Embedded Processing generated $2.70 billion in 2025, with customers' investments in software helping extend relationships across product generations.
  • Industrial and automotive each represented 33% of revenue in 2025, while TI served over 100,000 customers and generated more than 80% of revenue through direct channels.
  • In February 2026, TI agreed to acquire Silicon Labs in an all-cash transaction with an enterprise value of approximately $7.5 billion, expanding its embedded wireless connectivity portfolio and linking those products to TI's manufacturing capacity and customer reach.

What the price assumes

At $278.31, the reverse DCF implies that free cash flow after stock pay grows 20.6% a year for ten years, using a 10.2% discount rate.

TI delivered -7.8% annual growth on that measure over the last 10 years, so the implied path requires a substantial reversal of its historical record.

The TenQ check sets a -1.9% annual growth bar by moving the historical rate halfway toward 4%, well below the price's implied requirement.

Value TXN on your own assumptions

What could change the story

  • The recovery follows a contraction: revenue grew 16.7% over the last twelve months, but its annual growth rate over the last three years was -4.1%.
  • Inventory stood at $4.6 billion at the end of June 2026 against $2.1 billion of quarterly cost of sales, leaving factory utilization and customer inventory adjustments important to sustaining margins.
  • Total debt of $14.1 billion compared with $7.0 billion of cash and short-term investments makes funding and integrating the planned Silicon Labs acquisition a material balance sheet consideration.
  • Cash returned to shareholders represented 108.7% of free cash flow in the TenQ check, while the September 2026 announcement proposed a 7% dividend increase to $1.52 per share, contingent on formal board declaration.

What to watch next

  • TI's outlook for the quarter to September 2026 calls for revenue of $5.65 billion to $6.15 billion and earnings per share between $2.23 and $2.57.
  • The earnings comparison needs to account for the 5-cent benefit included in the quarter to June 2026 that was absent from original guidance.
  • Plant and equipment spending of $514 million against operating cash flow of $2.7 billion in the quarter to June 2026 provides a reference point for whether lower capital spending supports cash generation, alongside separate tracking of CHIPS Act proceeds.
  • Updates on the Silicon Labs transaction should clarify integration plans and progress toward management's expected approximately $450 million of annual manufacturing and operational synergies within three years after closing.

Sources

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