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Texas Instruments Soars 62% YTD: Is TXN Stock Still Worth Buying?
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Key Takeaways
Texas Instruments gained 62% YTD, beating the tech sector and several semiconductor peers.
Texas Instruments Q1 revenues rose 18.6%, EPS climbed 31.3%, with upbeat Q2 growth guidance.
TXN data center revenues rose 90% YoY in Q1, while FY25 annual run rate reached $1.2 billion.
Texas Instruments Incorporated (TXN - Free Report) has delivered a robust 62% gain year to date (YTD), placing itself among the best-performing technology stocks in the broader equity market amid ongoing macroeconomic challenges and geopolitical tensions. This performance easily beat the broader Zacks Computer and Technology sector, which increased 11% in the same period.
The stock has also outpaced the gains of other major semiconductor players, including Amtech Systems, Inc. (ASYS - Free Report) , Broadcom Inc. (AVGO - Free Report) and NVIDIA Corporation (NVDA - Free Report) . YTD, shares of Amtech Systems, Broadcom and NVIDIA have risen 36.5%, 21.7% and 6.4%, respectively.
Texas Instruments has been a key beneficiary of the artificial intelligence (AI) boom, which has driven strong demand for its analog and embedded chips used across data centers, industrial customers and automotive markets. As the demand for analog and embedded chips supporting AI and high-performance computing (HPC) is likely to remain strong, TXN is well-positioned to capitalize on this opportunity. This makes the stock a more attractive investment option at present.
Texas Instruments YTD Price Return Performance
Image Source: Zacks Investment Research
Texas Instruments’ Financial Results Show Real Strength
Despite ongoing macroeconomic challenges, geopolitical issues, and trade and tariff wars, TXN’s financials remain rock solid. In the first quarter of 2026, revenues jumped 18.6% from the year-ago quarter, while non-GAAP earnings per share rose 31.3%.
Texas Instruments’ outlook for the second quarter remains upbeat. The company expects second-quarter revenues to increase 12-21% year over year to $5-$5.4 billion, reflecting continued momentum in AI-driven demand. The earnings guidance range of $1.77-$2.05 per share indicates year-over-year growth of 25-45%.
The Zacks Consensus Estimate for fiscal 2026 and 2027 suggests continued growth momentum for the company’s top and bottom lines.
Image Source: Zacks Investment Research
Texas Instruments’ cash flow generation also remains robust. Over the trailing 12 months, operating cash flow reached $7.8 billion, while free cash flow climbed to $4.35 billion. The company ended the first quarter of 2026 with a cash and short-term investment balance of $5.1 billion, up from $4.88 billion as of Dec. 31, 2025.
This strong liquidity position enables Texas Instruments to reinvest in research and development, expand manufacturing capabilities and return capital to shareholders. During the first quarter, it repurchased stocks worth $158 million and paid $1.29 billion in dividends. In the trailing 12 months, it returned $6 billion to shareholders through dividends and share buybacks. Share repurchases and dividend payments are a good way of returning cash to investors while boosting the company’s earnings.
Data Centers Could Be the Next Major Growth Driver for TXN
Texas Instruments is seeing rising momentum in the data center market, which has become an important growth driver for the company. During its first-quarter earnings call, management stated that revenue growth was led by industrial and data center demand. This is a positive sign because data centers are expanding rapidly as cloud computing, AI and enterprise workloads continue to grow.
Texas Instruments does not compete directly in high-end AI graphics processors. Instead, it supplies analog and embedded chips that are essential for data center infrastructure. These chips help manage power delivery, battery backup systems, cooling equipment, motor controls, signal conversion and server connectivity. As modern data centers become larger and more power-intensive, the need for efficient power management solutions increases.
In 2025, Texas Instruments’ data center business reached an annual run rate of about $1.2 billion, growing more than 50% year over year. In the first quarter of 2026, revenues from the data center end market surged 90% year over year and 25% sequentially. As cloud and AI workloads continue to rise, Texas Instruments’ strong portfolio and manufacturing scale position it well to benefit from sustained demand for efficient, high-performance power solutions in data center infrastructure.
TXN’s Internal Manufacturing Strategy Adds Long-Term Value
Texas Instruments serves diverse end markets like personal electronics, industrial, data center, communications and automotive. This diversity helps TXN avoid depending too much on one single market. If one segment slows, strength in another can help balance the results.
To keep its dominance across industries and capitalize on the emergence of 5G technology, AI and HPC space, Texas Instruments 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.
Texas Instruments is also set to receive up to $1.6 billion in CHIPS Act funding, with total lifetime benefits estimated between $7.5 billion and $9.5 billion. These incentives may help offset factory expansion costs and improve margins.
TXN’s Steady Growth Outlook Justifies Premium Valuation
Valuation-wise, Texas Instruments is overvalued, as suggested by the Zacks Value Score of F.
In terms of forward 12-month Price/Earnings (P/E), TXN shares are trading at 36.33X, higher than the sector’s 25.22X. However, we believe that the company’s steady earnings growth, rising AI-linked demand, strong cash generation and shareholder-friendly capital returns justify the premium valuation.
Texas Instruments Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Compared with other major semiconductor players, Texas Instruments is trading at a higher P/E multiple than Amtech Systems, Broadcom and NVIDIA. At present, Amtech Systems, Broadcom and NVIDIA are trading at P/E multiples of 31.54, 28.79 and 22.79, respectively.
Conclusion: Buy TXN Stock for Now
Texas Instruments may no longer be a bargain after its 62% rally, but the story still looks compelling. Strong financial execution, fast-growing data center exposure, healthy cash flow, diversified markets and expanding in-house manufacturing support a favorable long-term view. To gain exposure in a high-quality semiconductor stock with stable growth and AI-linked upside, TXN could be a better investment option right now.
View the Zacks #1 Rank List
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Texas Instruments Soars 62% YTD: Is TXN Stock Still Worth Buying?
Key Takeaways
Texas Instruments Incorporated (TXN - Free Report) has delivered a robust 62% gain year to date (YTD), placing itself among the best-performing technology stocks in the broader equity market amid ongoing macroeconomic challenges and geopolitical tensions. This performance easily beat the broader Zacks Computer and Technology sector, which increased 11% in the same period.
The stock has also outpaced the gains of other major semiconductor players, including Amtech Systems, Inc. (ASYS - Free Report) , Broadcom Inc. (AVGO - Free Report) and NVIDIA Corporation (NVDA - Free Report) . YTD, shares of Amtech Systems, Broadcom and NVIDIA have risen 36.5%, 21.7% and 6.4%, respectively.
Texas Instruments has been a key beneficiary of the artificial intelligence (AI) boom, which has driven strong demand for its analog and embedded chips used across data centers, industrial customers and automotive markets. As the demand for analog and embedded chips supporting AI and high-performance computing (HPC) is likely to remain strong, TXN is well-positioned to capitalize on this opportunity. This makes the stock a more attractive investment option at present.
Texas Instruments YTD Price Return Performance
Image Source: Zacks Investment Research
Texas Instruments’ Financial Results Show Real Strength
Despite ongoing macroeconomic challenges, geopolitical issues, and trade and tariff wars, TXN’s financials remain rock solid. In the first quarter of 2026, revenues jumped 18.6% from the year-ago quarter, while non-GAAP earnings per share rose 31.3%.
Texas Instruments’ outlook for the second quarter remains upbeat. The company expects second-quarter revenues to increase 12-21% year over year to $5-$5.4 billion, reflecting continued momentum in AI-driven demand. The earnings guidance range of $1.77-$2.05 per share indicates year-over-year growth of 25-45%.
The Zacks Consensus Estimate for fiscal 2026 and 2027 suggests continued growth momentum for the company’s top and bottom lines.
Image Source: Zacks Investment Research
Texas Instruments’ cash flow generation also remains robust. Over the trailing 12 months, operating cash flow reached $7.8 billion, while free cash flow climbed to $4.35 billion. The company ended the first quarter of 2026 with a cash and short-term investment balance of $5.1 billion, up from $4.88 billion as of Dec. 31, 2025.
This strong liquidity position enables Texas Instruments to reinvest in research and development, expand manufacturing capabilities and return capital to shareholders. During the first quarter, it repurchased stocks worth $158 million and paid $1.29 billion in dividends. In the trailing 12 months, it returned $6 billion to shareholders through dividends and share buybacks. Share repurchases and dividend payments are a good way of returning cash to investors while boosting the company’s earnings.
Data Centers Could Be the Next Major Growth Driver for TXN
Texas Instruments is seeing rising momentum in the data center market, which has become an important growth driver for the company. During its first-quarter earnings call, management stated that revenue growth was led by industrial and data center demand. This is a positive sign because data centers are expanding rapidly as cloud computing, AI and enterprise workloads continue to grow.
Texas Instruments does not compete directly in high-end AI graphics processors. Instead, it supplies analog and embedded chips that are essential for data center infrastructure. These chips help manage power delivery, battery backup systems, cooling equipment, motor controls, signal conversion and server connectivity. As modern data centers become larger and more power-intensive, the need for efficient power management solutions increases.
In 2025, Texas Instruments’ data center business reached an annual run rate of about $1.2 billion, growing more than 50% year over year. In the first quarter of 2026, revenues from the data center end market surged 90% year over year and 25% sequentially. As cloud and AI workloads continue to rise, Texas Instruments’ strong portfolio and manufacturing scale position it well to benefit from sustained demand for efficient, high-performance power solutions in data center infrastructure.
TXN’s Internal Manufacturing Strategy Adds Long-Term Value
Texas Instruments serves diverse end markets like personal electronics, industrial, data center, communications and automotive. This diversity helps TXN avoid depending too much on one single market. If one segment slows, strength in another can help balance the results.
To keep its dominance across industries and capitalize on the emergence of 5G technology, AI and HPC space, Texas Instruments 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.
Texas Instruments is also set to receive up to $1.6 billion in CHIPS Act funding, with total lifetime benefits estimated between $7.5 billion and $9.5 billion. These incentives may help offset factory expansion costs and improve margins.
TXN’s Steady Growth Outlook Justifies Premium Valuation
Valuation-wise, Texas Instruments is overvalued, as suggested by the Zacks Value Score of F.
In terms of forward 12-month Price/Earnings (P/E), TXN shares are trading at 36.33X, higher than the sector’s 25.22X. However, we believe that the company’s steady earnings growth, rising AI-linked demand, strong cash generation and shareholder-friendly capital returns justify the premium valuation.
Texas Instruments Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Compared with other major semiconductor players, Texas Instruments is trading at a higher P/E multiple than Amtech Systems, Broadcom and NVIDIA. At present, Amtech Systems, Broadcom and NVIDIA are trading at P/E multiples of 31.54, 28.79 and 22.79, respectively.
Conclusion: Buy TXN Stock for Now
Texas Instruments may no longer be a bargain after its 62% rally, but the story still looks compelling. Strong financial execution, fast-growing data center exposure, healthy cash flow, diversified markets and expanding in-house manufacturing support a favorable long-term view. To gain exposure in a high-quality semiconductor stock with stable growth and AI-linked upside, TXN could be a better investment option right now.
Texas Instruments sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.