TXN
TEXAS INSTRUMENTS INCNasdaqValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Aug 17, 2026 · Valuation Aug 8, 2026
What drives TXN's base case?
base-case thesisIndustrial, data-center and automotive demand drove a broad recovery in the latest quarter. Newer factories should become more useful as sales grow, while the shift toward larger wafers lowers production costs. Growth nevertheless slows after customers finish rebuilding inventories, leaving a mature but steadily expanding chip business.
What shapes the assumptions
Q2 sales increased 23% and management guided to a higher Q3 midpoint
Near-term sales momentum
Raises revenue growth
Industrial, automotive and data center account for roughly three quarters of sales
Exposure to priority end markets
Raises revenue growth
Q2 profit from core operations rose 48% from a year earlier
Profitability at higher factory use
Raises operating margin
Trailing factory spending fell by more than $1.6 billion
Capital-spending burden
Lowers reinvestment
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 35.2% a year. Over the last 5 years it grew 3.0% a year — so the price assumes far more than it has delivered.
What else could explain it?›
- How confident is this estimate?
- Robustness 56.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Base inputs from financials
source period →Base revenue (TTM)
$19.5B
Diluted shares
920,000,000
Net cash
-$10.4B
Bear
low confidence$49.24
IV / share
-82.4% vs $279.58
- Explicit cash flows
- $16.05
- Terminal value
- $44.49
- Net cash
- -$11.30
- Intrinsic value / share
- $49.24
90.4% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
bear revenue growth (avg 4%) runs well above the trailing -13% trend
Revenue growth8.0% → 4.0% → 3.0% → 2.5% → 2.0%medium
How derived: The forecast starts from Q2 growth of 0.23 and management's Q3 revenue midpoint of $5.90 billion, then assumes the semiconductor recovery loses momentum because recent demand remains cyclical and the prior peak was followed by two years of contraction.
Why this confidence: Near-term management guidance ↑, Semiconductor-cycle uncertainty over five years ↓
Evidence for
- TI said the 2025 analog and embedded-semiconductor recovery was slower than prior upturns and global semiconductor shipments remained below their previous peak.[TI 2025 Form 10-K]· primary
Evidence against
- Q2 2026 revenue increased 0.23 year over year, with broad growth led by industrial, data center and automotive, and management guided Q3 revenue to $5.65 billion-$6.15 billion.[TI Q2 2026 results]· primary
Operating margin36.0%medium
How derived: The assumption discounts the recent Q2 margin of about 0.42 because weaker utilization would reduce factory absorption while Embedded Processing remains materially less profitable than Analog.
Why this confidence: Reported segment profitability ↑, Sensitivity of factory utilization to demand ↓
Evidence for
- Embedded Processing generated a 2025 segment margin of only 0.113, and TI attributed its profit decline partly to higher manufacturing costs and operating expenses.[TI 2025 Form 10-K]· primary
Evidence against
- Q2 2026 operating profit was $2.31 billion on $5.463 billion of revenue, and Analog segment profit increased 0.50 year over year.[TI Q2 2026 results]· primary
Tax rate15.0%medium
How derived: The rate begins with TI's 2025 effective rate of 0.124 but adds a cushion for reduced discrete benefits and uncertainty over the durability of tax credits and foreign incentives.
Why this confidence: Reported effective-tax reconciliation ↑, Long-term policy and discrete-item uncertainty ↓
Evidence for
- The statutory U.S. corporate rate was 0.21 in 2025, materially above TI's effective rate after incentives and credits.[TI 2025 Form 10-K]· primary
Evidence against
- TI reported a 2025 effective rate of 0.124 and said 2026-and-beyond taxes should be lower than under prior law.[TI 2025 Form 10-K]· primary
Reinvestment rate45.0%low
How derived: The assumption treats 0.45 of after-tax operating profit as reinvestment because slower sales would make TI's still-large manufacturing roadmap less productive even as 2026 capital spending declines.
Why this confidence: Company capital-spending roadmap ↑, Reinvestment efficiency must be estimated ↓
Evidence for
- TI invested $4.55 billion in capital expenditures during 2025, equal to roughly 0.26 of revenue.[TI 2025 Form 10-K]· primary
Evidence against
- Trailing capital expenditures fell to $3.312 billion by Q2 2026, while trailing free cash flow increased to $6.534 billion.[TI Q2 2026 results]· primary
Terminal growth2.0%low
How derived: The mature-state rate is set near long-run inflation because TI's broad analog franchise has durable electronic-content growth but remains exposed to recurring industrial and automotive cycles.
Why this confidence: Durable electronic-content trend ↑, Very long forecast horizon ↓
Evidence for
- TI identified continuing growth in semiconductor content in electronics, particularly in automotive, industrial and data-center markets.[TI 2025 Form 10-K]· primary
Evidence against
- TI also described the current market recovery as slower than prior upturns and noted that global semiconductor shipments remained below their previous peak.[TI 2025 Form 10-K]· primary
Base
low confidence$87.67
IV / share
-68.6% vs $279.58
- Explicit cash flows
- $23.72
- Terminal value
- $75.25
- Net cash
- -$11.30
- Intrinsic value / share
- $87.67
85.8% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
base revenue growth (avg 7%) runs well above the trailing -13% trend
Revenue growth12.0% → 8.0% → 6.0% → 5.0% → 4.0%medium
How derived: The forecast carries the Q2 recovery and Q3 guidance into the first two years, then moderates toward mid-single-digit growth as industrial, automotive and data-center content gains are balanced by normal semiconductor cyclicality.
Why this confidence: Current-quarter results and management guidance ↑, Cyclical demand beyond the guidance period ↓
Evidence for
- Q2 2026 revenue increased 0.23 year over year, and management guided Q3 revenue to a midpoint of $5.90 billion.[TI Q2 2026 results]· primary
- TI said industrial, automotive and data center represented about 0.75 of revenue and were its principal long-term growth priorities.[TI 2026 capital-management transcript]· primary
Evidence against
- TI said the 2025 recovery was slower than prior upturns, while the supplied actuals show revenue declined in 2023 and 2024.[TI 2025 Form 10-K]· primary
Operating margin40.0%medium
How derived: The target sits below the latest quarterly level but above the 2025 company trend because higher sales and a growing share of internally produced 300mm wafers should improve fixed-cost absorption.
Why this confidence: Recent reported profitability ↑, Uncertain future factory utilization and segment mix ↓
Evidence for
- Q2 2026 operating profit was $2.31 billion on $5.463 billion of revenue, and TI attributed strong cash generation partly to the benefit of 300mm production.[TI Q2 2026 results]· primary
- TI expects more than 0.80 of internally manufactured wafers to use 300mm technology by 2030.[TI 2026 capital-management transcript]· primary
Evidence against
- Embedded Processing's 2025 segment margin fell to 0.113 as higher manufacturing costs and operating expenses offset revenue growth.[TI 2025 Form 10-K]· primary
Tax rate13.0%medium
How derived: The assumption rounds the 2025 effective rate of 0.124 upward to allow for fewer discrete benefits while retaining the recurring effect of research credits, foreign incentives and current U.S. tax law.
Why this confidence: Company effective-tax-rate disclosure ↑, Dependence on incentives and tax legislation ↓
Evidence for
- TI's 2025 effective tax rate was 0.124 after foreign incentives, foreign-derived-income benefits, research credits and other adjustments.[TI 2025 Form 10-K]· primary
Evidence against
- The underlying U.S. statutory corporate rate was 0.21, and tax benefits or legislation could change over a five-year forecast.[TI 2025 Form 10-K]· primary
Reinvestment rate35.0%low
How derived: The model reinvests 0.35 of after-tax operating profit because capital spending is falling from its construction peak but TI must still fund capacity, research and working capital to support sustained mid-single-digit growth.
Why this confidence: Management's capital-spending direction ↑, Future spending is explicitly contingent on revenue ↓
Evidence for
- TI invested $3.9 billion in R&D and SG&A and $3.312 billion in capital expenditures during the twelve months through Q2 2026.[TI Q2 2026 results]· primary
Evidence against
- TI said it was reducing capital expenditures as major capacity expansions neared completion, and spending from 2027 onward will depend on revenue and expected growth.[TI 2026 capital-management transcript]· primary
Terminal growth2.5%low
How derived: The mature-state rate reflects inflation plus modest real expansion from increasing chip content while remaining below the explicit-period growth path and well below the current cyclical rebound.
Why this confidence: Broad and long-lived product-market exposure ↑, Terminal assumptions extend beyond observable guidance ↓
Evidence for
- TI reported continuing growth in semiconductor content and focuses strategically on industrial, automotive and data-center markets because it regards them as its best long-term opportunities.[TI 2025 Form 10-K]· primary
Evidence against
- The supplied history includes several revenue contractions, including declines of about 0.125 in 2023 and 0.107 in 2024.[TI 2025 Form 10-K]· primary
Bull
low confidence$133.54
IV / share
-52.2% vs $279.58
- Explicit cash flows
- $31.44
- Terminal value
- $113.39
- Net cash
- -$11.30
- Intrinsic value / share
- $133.54
84.9% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
bull revenue growth (avg 10%) runs well above the trailing -13% trend
Revenue growth16.0% → 12.0% → 9.0% → 7.0% → 5.0%low
How derived: The forecast assumes Q2's broad 0.23 growth and strong Q3 guidance mark an extended upcycle, with industrial automation, vehicle electronics, data centers and Silicon Labs expanding demand before growth normalizes.
Why this confidence: Broad recent end-market growth ↑, Acquisition closing and integration uncertainty ↓, Extended high-growth period exceeds management guidance ↓
Evidence for
- Q2 2026 revenue increased 0.23 year over year with broad growth led by industrial, data center and automotive, and Q3 guidance implied another sequential increase at its midpoint.[TI Q2 2026 results]· primary
- The planned Silicon Labs acquisition would add secure wireless-connectivity products and is expected to close in the first half of 2027, subject to approvals.[TI to acquire Silicon Labs]· primary
Evidence against
- TI described the 2025 analog and embedded recovery as slower than prior upturns and said global semiconductor shipments remained below their previous peak.[TI 2025 Form 10-K]· primary
Operating margin44.0%low
How derived: The target assumes high factory utilization and the planned shift toward internal 300mm production lift profitability modestly above Q2's roughly 0.42 level.
Why this confidence: Demonstrated Q2 profit leverage ↑, Margin exceeds the latest reported quarter ↓, Acquisition-cost uncertainty ↓
Evidence for
- Q2 2026 operating profit increased 0.48 year over year, while Analog operating profit increased 0.50 on a 0.26 revenue increase.[TI Q2 2026 results]· primary
- TI expects more than 0.95 of wafers to be manufactured internally and more than 0.80 of internal wafers to use 300mm technology by 2030.[TI 2026 capital-management transcript]· primary
Evidence against
- Embedded Processing's 2025 margin was only 0.113, and the pending Silicon Labs transaction could introduce acquisition and integration costs.[TI 2025 Form 10-K]· primary
Tax rate11.0%low
How derived: The assumption places the rate below 2025's 0.124 because current law provides capital-investment and research benefits and TI expects taxes after 2025 to be lower than under prior law.
Why this confidence: Explicit company statement on current tax law ↑, Assumption is below the latest annual effective rate ↓, Future legislation is uncertain ↓
Evidence for
- TI said current U.S. law permits expensing of eligible research and capital expenditures, increases the CHIPS investment credit and should lower taxes relative to prior law from 2026 onward.[TI 2025 Form 10-K]· primary
Evidence against
- TI's 2025 effective rate was 0.124 and its statutory U.S. corporate rate was 0.21, so sustaining a lower rate depends on continuing benefits.[TI 2025 Form 10-K]· primary
Reinvestment rate30.0%low
How derived: The model assumes only 0.30 of after-tax operating profit must be reinvested because existing factory capacity, falling construction spending and 300mm cost advantages allow sales to grow faster than incremental capital.
Why this confidence: Observed decline in capital spending ↑, High assumed sales-to-capital efficiency ↓, Silicon Labs funding and integration needs ↓
Evidence for
- Trailing capital expenditures declined from $4.936 billion to $3.312 billion while trailing revenue and cash flow from operations increased.[TI Q2 2026 results]· primary
- Management said major capacity expansions were nearing completion and capital spending from 2027 onward would scale with expected growth.[TI 2026 capital-management transcript]· primary
Evidence against
- The forecast requires sustained high growth, and TI is pursuing a $7.5 billion cash acquisition of Silicon Labs that will require additional financing and integration investment.[TI to acquire Silicon Labs]· primary
Terminal growth3.0%low
How derived: The mature-state rate assumes TI continues gaining from rising semiconductor content and its durable industrial, automotive and data-center exposure while still slowing well below the explicit bull-case path.
Why this confidence: Long-lived products and increasing chip content ↑, High mature-state growth for a cyclical manufacturer ↓, Forecast extends indefinitely ↓
Evidence for
- TI identified semiconductor-content growth and industrial, automotive and data center as its strongest long-term market opportunities.[TI 2025 Form 10-K]· primary
Evidence against
- TI operates in cyclical markets, and its supplied history includes multiple multiyear periods of flat or declining revenue.[TI 2025 Form 10-K]· primary
Valuation robustness
reliability of the estimate, not a stock rating56 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 86% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
- The reinvestment assumption is low-confidence.→ reinvestment
- The terminal growth assumption is low-confidence.→ terminal growth
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q3 2024 | -8.4% | 0.45 | -6.3% | 920M | 0.4% |
| Q1 2025 | 11.1% | -0.3 | -18.7% | 916M | -0.1% |
| Q2 2025 | 16.4% | 0.61 | 10.3% | 912M | -0.8% |
| Q3 2025 | 14.2% | 1.09 | 140.3% | 914M | -0.7% |
| Q1 2026 | 18.6% | 0.92 | 408.7% | 914M | -0.2% |
| Q2 2026 | 22.8% | 2.38 | 291.0% | 920M | 0.9% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
The input is the U.S. Treasury's 10-year constant-maturity yield reported for August 7, 2026.
The input uses the published five-year monthly regression beta for TXN, indicating equity-price sensitivity approximately equal to the broad market.
The input uses the July 1, 2026 trailing-twelve-month adjusted-payout implied premium published by NYU Stern.
The input uses the latest precisely time-stamped TXN market quote located before the August 8, 2026 valuation date.
Generated 8/8/2026, 10:02:49 AM · pipeline v1.1.0