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TXN vs. LRCX: Which Semiconductor Stock Is the Better Buy Right Now?
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Key Takeaways
TXN and Lam Research both benefit from AI demand, but Texas Instruments offers the better risk-reward.
TXN's data center revenues surged 90% in Q1 as demand rose for power management chips.
Texas Instruments trades at a lower forward P/E than Lam Research, supporting its stronger value case.
Texas Instruments Incorporated (TXN - Free Report) and Lam Research Corporation (LRCX - Free Report) are both important players in the semiconductor industry, but they operate in different parts of the supply chain. Texas Instruments focuses on analog and embedded chips used across industrial, automotive and data center applications, while Lam Research provides wafer fabrication equipment that enables chipmakers to manufacture advanced semiconductors.
Both companies are benefiting from the ongoing artificial intelligence (AI)-driven technology cycle and the broader recovery in semiconductor demand. However, investors must weigh growth prospects, profitability, risks and valuation to determine which stock offers the better opportunity today.
TXN: AI Boom and Manufacturing Strength Aid Stable Growth
Texas Instruments delivered a strong start to 2026, highlighting the benefits of its broad product portfolio and manufacturing strategy. First-quarter revenues increased 19% year over year to $4.83 billion, while earnings per share (EPS) rose 31% to $1.68.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Texas Instruments is seeing rising momentum in the data center market, which has become an important growth driver for the company. It 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.
One of TXN’s biggest strengths is its manufacturing advantage. The company continues expanding its 300-millimeter wafer capacity, which supports lower production costs and stronger margins over time. In the first quarter, non-GAAP gross margin expanded 120 basis points (bps) year over year to 58%, while non-GAAP operating margin improved 490 bps to 37.5%.
Texas Instruments’ guidance for the second quarter suggests that the growth trajectory remains intact. TXN calls for second-quarter 2026 revenues in the range of $5.00-$5.40 billion. The Zacks Consensus Estimate for revenues is pegged at $5.22 billion, indicating year-over year growth of 17.4%. The company expects earnings per share between $1.77 and $2.05. The Zacks Consensus Estimate for earnings is pegged at $1.90, calling for year-over year growth of 34.8%. Estimates for second-quarter 2026 earnings have been revised upward by 22.6% in the past 60 days.
Lam Research Capitalizes on AI Spending Wave
Lam Research continues to benefit from rising AI-driven demand across NAND, DRAM and foundry markets. During the last earnings call, the company raised its 2026 wafer fabrication equipment (WFE) spending outlook to $140 billion from $135 billion, reflecting stronger customer spending across semiconductor segments.
In the company’s last reported financial results for the third quarter of fiscal 2026, total revenues rose 23.8% year over year to $5.84 billion and beat the Zacks Consensus Estimate by 1.3%, primarily driven by continued demand across the Systems and Customer Support Business Group segments. Lam Research’s non-GAAP EPS rose 41.3% year over year to $1.47 and surpassed the consensus estimate by 8.1%.
Lam Research Corporation Price, Consensus and EPS Surprise
LRCX’s biggest strength lies in etch and deposition intensity tied to advanced AI chips and high-bandwidth memory. During the last earnings call, management highlighted that AI workloads are accelerating demand for higher-layer NAND and advanced DRAM nodes, areas where Lam Research has strong technological leadership. The company expects advanced packaging revenues to grow more than 50% in calendar year 2026. Its customer support business also crossed the $2 billion quarterly revenue mark for the first time, providing recurring revenue strength.
Margins are also improving steadily. Non-GAAP gross margin increased 20 basis points (bps) sequentially to 49.9% in the third quarter, while fourth-quarter guidance points to further expansion and reach 50.5%. Non-GAAP operating margin grew 70 bps quarter over quarter to 35% and is expected to reach 36.5% in the fourth quarter, supported by manufacturing efficiencies and strong product demand.
Lam Research’s fourth-quarter guidance indicates growth momentum will continue in the near term. For the fourth quarter of fiscal 2026, LRCX expects revenues to be $6.60 billion (+/- $400 million). The Zacks Consensus Estimate for revenues is pegged at $6.65 billion, indicating year-over-year growth of 28.7%. The company expects EPS of $1.65 (+/- $0.15) for the fourth quarter. The Zacks Consensus Estimate for earnings is pegged at $1.65, suggesting year-over-year growth of 24.1%. Estimates for third-quarter fiscal 2026 earnings have been revised upward by 14.6% in the past 60 days.
Valuation Comparison: TXN Holds the Edge
While both companies are benefiting from the AI boom, valuation is where Texas Instruments gains a meaningful advantage. TXN currently trades at a forward P/E multiple of 36.94, lower than LRCX’s 48.82. While Lam Research’s higher multiple reflects its stronger near-term growth outlook, investors are already paying a significant premium for that growth.
Image Source: Zacks Investment Research
LRCX has clearly outperformed in 2026, with shares gaining 121.3% year to date compared with TXN’s 74.4% increase. However, the stronger rally also raises the possibility that much of the AI-driven optimism is already reflected in Lam Research’s stock price. Texas Instruments offers exposure to industrial automation, automotive electronics and data center growth while trading at a more reasonable valuation.
Image Source: Zacks Investment Research
Conclusion: TXN Seems a Better Bet Right Now
Both Texas Instruments and Lam Research remain attractive semiconductor investments with strong long-term prospects. Lam Research offers faster near-term growth and stands to benefit directly from rising semiconductor equipment spending driven by AI. However, that opportunity comes with greater exposure to industry spending cycles and a much richer valuation.
Texas Instruments offers a more balanced investment case. The company is benefiting from AI-related data center growth, strengthening industrial demand and a long-term manufacturing strategy that should continue to improve margins. Combined with its lower valuation and more diversified end markets, TXN provides a better mix of growth, stability and value. For investors seeking the stronger risk-reward opportunity today, Texas Instruments appears to be the better investment.
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TXN vs. LRCX: Which Semiconductor Stock Is the Better Buy Right Now?
Key Takeaways
Texas Instruments Incorporated (TXN - Free Report) and Lam Research Corporation (LRCX - Free Report) are both important players in the semiconductor industry, but they operate in different parts of the supply chain. Texas Instruments focuses on analog and embedded chips used across industrial, automotive and data center applications, while Lam Research provides wafer fabrication equipment that enables chipmakers to manufacture advanced semiconductors.
Both companies are benefiting from the ongoing artificial intelligence (AI)-driven technology cycle and the broader recovery in semiconductor demand. However, investors must weigh growth prospects, profitability, risks and valuation to determine which stock offers the better opportunity today.
TXN: AI Boom and Manufacturing Strength Aid Stable Growth
Texas Instruments delivered a strong start to 2026, highlighting the benefits of its broad product portfolio and manufacturing strategy. First-quarter revenues increased 19% year over year to $4.83 billion, while earnings per share (EPS) rose 31% to $1.68.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Texas Instruments Incorporated price-consensus-eps-surprise-chart | Texas Instruments Incorporated Quote
Texas Instruments is seeing rising momentum in the data center market, which has become an important growth driver for the company. It 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.
One of TXN’s biggest strengths is its manufacturing advantage. The company continues expanding its 300-millimeter wafer capacity, which supports lower production costs and stronger margins over time. In the first quarter, non-GAAP gross margin expanded 120 basis points (bps) year over year to 58%, while non-GAAP operating margin improved 490 bps to 37.5%.
Texas Instruments’ guidance for the second quarter suggests that the growth trajectory remains intact. TXN calls for second-quarter 2026 revenues in the range of $5.00-$5.40 billion. The Zacks Consensus Estimate for revenues is pegged at $5.22 billion, indicating year-over year growth of 17.4%. The company expects earnings per share between $1.77 and $2.05. The Zacks Consensus Estimate for earnings is pegged at $1.90, calling for year-over year growth of 34.8%. Estimates for second-quarter 2026 earnings have been revised upward by 22.6% in the past 60 days.
Lam Research Capitalizes on AI Spending Wave
Lam Research continues to benefit from rising AI-driven demand across NAND, DRAM and foundry markets. During the last earnings call, the company raised its 2026 wafer fabrication equipment (WFE) spending outlook to $140 billion from $135 billion, reflecting stronger customer spending across semiconductor segments.
In the company’s last reported financial results for the third quarter of fiscal 2026, total revenues rose 23.8% year over year to $5.84 billion and beat the Zacks Consensus Estimate by 1.3%, primarily driven by continued demand across the Systems and Customer Support Business Group segments. Lam Research’s non-GAAP EPS rose 41.3% year over year to $1.47 and surpassed the consensus estimate by 8.1%.
Lam Research Corporation Price, Consensus and EPS Surprise
Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote
LRCX’s biggest strength lies in etch and deposition intensity tied to advanced AI chips and high-bandwidth memory. During the last earnings call, management highlighted that AI workloads are accelerating demand for higher-layer NAND and advanced DRAM nodes, areas where Lam Research has strong technological leadership. The company expects advanced packaging revenues to grow more than 50% in calendar year 2026. Its customer support business also crossed the $2 billion quarterly revenue mark for the first time, providing recurring revenue strength.
Margins are also improving steadily. Non-GAAP gross margin increased 20 basis points (bps) sequentially to 49.9% in the third quarter, while fourth-quarter guidance points to further expansion and reach 50.5%. Non-GAAP operating margin grew 70 bps quarter over quarter to 35% and is expected to reach 36.5% in the fourth quarter, supported by manufacturing efficiencies and strong product demand.
Lam Research’s fourth-quarter guidance indicates growth momentum will continue in the near term. For the fourth quarter of fiscal 2026, LRCX expects revenues to be $6.60 billion (+/- $400 million). The Zacks Consensus Estimate for revenues is pegged at $6.65 billion, indicating year-over-year growth of 28.7%. The company expects EPS of $1.65 (+/- $0.15) for the fourth quarter. The Zacks Consensus Estimate for earnings is pegged at $1.65, suggesting year-over-year growth of 24.1%. Estimates for third-quarter fiscal 2026 earnings have been revised upward by 14.6% in the past 60 days.
Valuation Comparison: TXN Holds the Edge
While both companies are benefiting from the AI boom, valuation is where Texas Instruments gains a meaningful advantage. TXN currently trades at a forward P/E multiple of 36.94, lower than LRCX’s 48.82. While Lam Research’s higher multiple reflects its stronger near-term growth outlook, investors are already paying a significant premium for that growth.
Image Source: Zacks Investment Research
LRCX has clearly outperformed in 2026, with shares gaining 121.3% year to date compared with TXN’s 74.4% increase. However, the stronger rally also raises the possibility that much of the AI-driven optimism is already reflected in Lam Research’s stock price. Texas Instruments offers exposure to industrial automation, automotive electronics and data center growth while trading at a more reasonable valuation.
Image Source: Zacks Investment Research
Conclusion: TXN Seems a Better Bet Right Now
Both Texas Instruments and Lam Research remain attractive semiconductor investments with strong long-term prospects. Lam Research offers faster near-term growth and stands to benefit directly from rising semiconductor equipment spending driven by AI. However, that opportunity comes with greater exposure to industry spending cycles and a much richer valuation.
Texas Instruments offers a more balanced investment case. The company is benefiting from AI-related data center growth, strengthening industrial demand and a long-term manufacturing strategy that should continue to improve margins. Combined with its lower valuation and more diversified end markets, TXN provides a better mix of growth, stability and value. For investors seeking the stronger risk-reward opportunity today, Texas Instruments appears to be the better investment.
Texas Instruments sports a Zacks Rank #1 (Strong Buy) at present, while Lam Research carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.