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TXN vs. ADI: Which Stock Has an Edge in the Analog Signal Processing?
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Key Takeaways
Texas Instruments' analog segment rose 17.9% in Q2 2025, boosted by semiconductor cycle recovery.
ADI posted 22% revenue growth in Q2 fiscal 2025, fueled by EVs, industrial demand and data centers.
TXN shares are up 45.3% YTD vs. ADI's 15.2%, but ADI trades at a much lower forward P/S multiple.
Texas Instruments (TXN - Free Report) and Analog Devices (ADI - Free Report) are two of the largest semiconductor players in the analog signal processing space. Both Analog Devices and Texas Instruments develop analog chips for industrial, automotive and consumer electronic applications.
With the recent boom in the semiconductor industry, the question remains: which stock has more upside potential? Let us break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for Texas Instruments Stock
Texas Instruments’ analog segment grew 17.9% year over year to reach $3.45 billion in the second quarter of 2025. This massive growth has been on the back of the ongoing semiconductor cycle recovery in industrial, personal electronics, enterprise systems, and communications end markets.
To keep its dominance across industries, the emergence of 5G technology, AI and high performance computing space, TXN is prioritizing chip manufacturing under its internal manufacturing facilities instead of relying on outside foundries. The company aims to manufacture more than 95% of its wafers internally by 2030.
By building its internal manufacturing, the company will gain better control over production, quality and costs. Texas Instruments has been awarded up to $1.6 billion in CHIPS Act funding, with total benefits from the program expected to reach $7.5 billion to $9.5 billion over its lifetime.
However, Texas Instruments faces significant exposure to geopolitical risks, particularly in China, which accounted for approximately 20% of its 2024 revenues. While the company reported growth in China, rising geopolitical tensions and potential trade restrictions could impact future performance.
Furthermore, slow recovery across the automotive end market might hurt Texas Instruments’ overall growth prospects. Its automotive segment is recovering slowly compared to other markets. The Zacks Consensus Estimate for TXN’s 2025 and 2026 revenues indicates year-over-year growth of 12.9% and 8.8%, respectively. The consensus mark for EPS suggests a robust year-over-year improvement of 7.7% for 2025 and 14.8% for 2026.
Image Source: Zacks Investment Research
The Case for Analog Devices Stock
ADI is benefiting from its strong market position in high-performance analog, especially in the industrial, communications infrastructure and consumer markets. The strong momentum across the industrial and automotive end markets, especially the electric vehicle space, is growing on the back of its robust Battery Management System solutions.
Automotive, Analog Devices’ second-largest segment at 32% of revenues, continues to benefit from growing semiconductor content in electric vehicles, advanced driver assistance systems and in-cabin connectivity. Furthermore, the industrial segment, which accounted for 44% of Analog Devices’ second-quarter fiscal 2025 revenues, is showing signs of meaningful recovery. After three consecutive quarters of sequential growth, industrial is expected to be its fastest-growing market in the fiscal second quarter.
Analog Devices’ communications business, which comprises 12% of second-quarter fiscal 2025 total revenues, is benefiting from increased investments in AI-driven data centers. Moreover, ADI’s bottom line is benefiting from the normalization of inventory levels.
These factors have enabled Analog Devices to deliver a solid performance in its second quarter of fiscal 2025, with revenues reaching $2.64 billion, marking a 22% year-over-year increase. The Zacks Consensus Estimate for ADI’s fiscal 2025 and 2026 revenues indicates year-over-year growth of 12.2% and 10%, respectively. The consensus mark for EPS suggests a robust year-over-year improvement of 16% for fiscal 2025 and 19% for fiscal 2026.
Image Source: Zacks Investment Research
ADI vs. TXN: Price Performance and Valuation
Year to date, TXN shares have climbed 6.8% compared with the 16.4% rise in ADI shares.
Image Source: Zacks Investment Research
On the valuation front, TXN looks more attractive than ADI. ADI trades at a forward 12-month P/S multiple of 10.63X, significantly higher than Texas Instruments’ 9.79X.
Image Source: Zacks Investment Research
Conclusion: Buy ADI Stock Now
Although both TXN and ADI are established players in the analog signal processing space, TXN is facing multiple near-term headwinds like geopolitical risks and slow recovery in the automotive end market. This is not the case for ADI, which is performing extraordinarily well at present.
ADI carries a Zacks Rank #2 (Buy), making it a clear winner over Texas Instruments, which has a Zacks Rank #3 (Hold) at present.
Image: Shutterstock
TXN vs. ADI: Which Stock Has an Edge in the Analog Signal Processing?
Key Takeaways
Texas Instruments (TXN - Free Report) and Analog Devices (ADI - Free Report) are two of the largest semiconductor players in the analog signal processing space. Both Analog Devices and Texas Instruments develop analog chips for industrial, automotive and consumer electronic applications.
With the recent boom in the semiconductor industry, the question remains: which stock has more upside potential? Let us break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for Texas Instruments Stock
Texas Instruments’ analog segment grew 17.9% year over year to reach $3.45 billion in the second quarter of 2025. This massive growth has been on the back of the ongoing semiconductor cycle recovery in industrial, personal electronics, enterprise systems, and communications end markets.
To keep its dominance across industries, the emergence of 5G technology, AI and high performance computing space, TXN is prioritizing chip manufacturing under its internal manufacturing facilities instead of relying on outside foundries. The company aims to manufacture more than 95% of its wafers internally by 2030.
By building its internal manufacturing, the company will gain better control over production, quality and costs. Texas Instruments has been awarded up to $1.6 billion in CHIPS Act funding, with total benefits from the program expected to reach $7.5 billion to $9.5 billion over its lifetime.
However, Texas Instruments faces significant exposure to geopolitical risks, particularly in China, which accounted for approximately 20% of its 2024 revenues. While the company reported growth in China, rising geopolitical tensions and potential trade restrictions could impact future performance.
Furthermore, slow recovery across the automotive end market might hurt Texas Instruments’ overall growth prospects. Its automotive segment is recovering slowly compared to other markets. The Zacks Consensus Estimate for TXN’s 2025 and 2026 revenues indicates year-over-year growth of 12.9% and 8.8%, respectively. The consensus mark for EPS suggests a robust year-over-year improvement of 7.7% for 2025 and 14.8% for 2026.
Image Source: Zacks Investment Research
The Case for Analog Devices Stock
ADI is benefiting from its strong market position in high-performance analog, especially in the industrial, communications infrastructure and consumer markets. The strong momentum across the industrial and automotive end markets, especially the electric vehicle space, is growing on the back of its robust Battery Management System solutions.
Automotive, Analog Devices’ second-largest segment at 32% of revenues, continues to benefit from growing semiconductor content in electric vehicles, advanced driver assistance systems and in-cabin connectivity. Furthermore, the industrial segment, which accounted for 44% of Analog Devices’ second-quarter fiscal 2025 revenues, is showing signs of meaningful recovery. After three consecutive quarters of sequential growth, industrial is expected to be its fastest-growing market in the fiscal second quarter.
Analog Devices’ communications business, which comprises 12% of second-quarter fiscal 2025 total revenues, is benefiting from increased investments in AI-driven data centers. Moreover, ADI’s bottom line is benefiting from the normalization of inventory levels.
These factors have enabled Analog Devices to deliver a solid performance in its second quarter of fiscal 2025, with revenues reaching $2.64 billion, marking a 22% year-over-year increase. The Zacks Consensus Estimate for ADI’s fiscal 2025 and 2026 revenues indicates year-over-year growth of 12.2% and 10%, respectively. The consensus mark for EPS suggests a robust year-over-year improvement of 16% for fiscal 2025 and 19% for fiscal 2026.
Image Source: Zacks Investment Research
ADI vs. TXN: Price Performance and Valuation
Year to date, TXN shares have climbed 6.8% compared with the 16.4% rise in ADI shares.
Image Source: Zacks Investment Research
On the valuation front, TXN looks more attractive than ADI. ADI trades at a forward 12-month P/S multiple of 10.63X, significantly higher than Texas Instruments’ 9.79X.
Image Source: Zacks Investment Research
Conclusion: Buy ADI Stock Now
Although both TXN and ADI are established players in the analog signal processing space, TXN is facing multiple near-term headwinds like geopolitical risks and slow recovery in the automotive end market. This is not the case for ADI, which is performing extraordinarily well at present.
ADI carries a Zacks Rank #2 (Buy), making it a clear winner over Texas Instruments, which has a Zacks Rank #3 (Hold) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.