We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Texas Instruments vs. Cerebras Systems: Which Chip Stock Has the Edge?
Read MoreHide Full Article
Key Takeaways
Texas Instruments' Q2 revenues rose 23% to $5.46B, while EPS jumped 52% to $2.14.
Cerebras Systems' core revenues surged 103% to $209.9M, but it posted a $450.5M GAAP net loss.
TXN trades at 10.48X forward sales versus 21.40X for CBRS, showing the valuation gap.
Texas Instruments Incorporated (TXN - Free Report) and Cerebras Systems Inc. (CBRS - Free Report) give investors exposure to very different semiconductor opportunities. Texas Instruments is a mature chipmaker with a broad analog and embedded-chip portfolio serving industrial, automotive, data center and consumer markets. Cerebras, meanwhile, is a newer AI-focused company that develops wafer-scale processors and solutions designed to handle AI inference workloads.
The contrast between the two companies is especially clear in their latest results. TXN is benefiting from a broad recovery in chip demand while producing strong profits and cash flow. CBRS is growing much faster, but that growth comes with significantly higher execution and profitability risks.
TXN: A Broad Recovery Is Driving Growth
Texas Instruments appears to be entering the second half of 2026 with considerable momentum. Second-quarter 2026 revenues increased 23% year over year to $5.46 billion, helped by strong demand across industrial, automotive and data center markets.
Industrial revenues rose roughly 30%, automotive revenues increased at a mid-teen rate, and data center revenues doubled from the year-ago period as AI infrastructure investment continued to expand. Management also expects demand to remain healthy in the third quarter, suggesting that the recovery is not limited to a single end market.
Texas Instruments is converting that revenue growth into stronger profits. Gross margin increased to 61.4% from 57.9% a year earlier, while operating margin expanded to 42.3% from 35.1%. As a result, second-quarter earnings per share (EPS) jumped 52% year over year to $2.14.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Texas Instruments also benefits from its large 300mm manufacturing footprint. These facilities can lower production costs and strengthen TXN's competitive position as chip volumes recover. Its broad analog portfolio and direct relationships with customers also provide a relatively stable business base.
Cash generation is another major advantage. Texas Instruments generated $6.5 billion in cash over the trailing 12 months and returned $5.8 billion to shareholders through dividends and share repurchases. This gives the company room to invest in capacity while continuing to reward investors.
The third-quarter outlook reinforces the positive trend. At the midpoints of its guidance ranges, revenues are expected to rise about 25% year over year, while EPS is projected to increase roughly 62%.
CBRS: Faster Growth but Much Higher Risk
Cerebras Systems presents a very different investment story. Its growth is considerably faster, driven by rising demand for AI computing and inference. Second-quarter 2026 core revenues surged 103% year over year to $209.9 million. Core cloud and services revenues were even stronger, jumping 287% to $127.7 million. The company expects full-year 2026 core revenues of $880 million to $890 million.
Cerebras Systems also ended the quarter with $25.4 billion in remaining performance obligations (RPO), which provides substantial potential revenue visibility. Its ability to convert those commitments into actual revenues, however, will depend on execution, manufacturing capacity and data center availability.
The company is rapidly expanding its infrastructure. Cerebras Systems has secured more than 600 megawatts of data center capacity, which is operational or is expected to come online by the end of 2027. Manufacturing capacity is expected to increase more than 10 times during 2026 and expand further in 2027.
Its architecture could also help it avoid some industry bottlenecks because Cerebras Systems does not require high-bandwidth memory, CoWoS packaging or leading-edge 3nm fabrication for its current approach. Partnerships with companies such as OpenAI, AWS and Advanced Micro Devices could further expand its AI footprint.
However, the financial risks are difficult to overlook. Cerebras Systems reported a GAAP net loss of $450.5 million in the second quarter, while its accumulated deficit reached roughly $1.4 billion. The company continues to spend heavily on research and development, cloud infrastructure and data center capacity.
Cerebras Systems Inc. Price, Consensus and EPS Surprise
Margins are also under pressure. Core gross margin fell 590 basis points sequentially to 40.6%, partly because Cerebras Systems temporarily rented systems from customers to meet strong inference demand. Management expects third-quarter core gross margin of 38%-40% and core operating margin of negative 25% to negative 23%.
This means CBRS is currently prioritizing expansion over near-term profitability. This strategy could pay off if AI demand remains strong, but it leaves less room for execution mistakes.
Customer concentration adds another layer of risk. Three customers accounted for 34%, 32% and 10% of second-quarter revenues, while a significant portion of the company's RPO is connected to its OpenAI agreement.
Valuation: TXN Offers a More Balanced Setup
Valuation highlights the different risk profiles of the two stocks.
Cerebras Systems trades at a forward 12-month price-to-sales (P/S) multiple of 21.40 compared with 10.48 for Texas Instruments. CBRS' premium is understandable, given its much faster growth, but investors are also paying more for a business that is still loss-making and heavily dependent on future execution.
Image Source: Zacks Investment Research
Both stocks have also struggled recently. TXN shares have declined 11% over the past three months, while CBRS shares have fallen 8.1%.
Image Source: Zacks Investment Research
The key difference is what investors are getting behind those stock prices and valuations. Texas Instruments already has substantial earnings, cash generation, manufacturing scale and a diversified customer base. Meanwhile, Cerebras Systems’ case suggests that investors need to keep faith in its future growth opportunity.
Cerebras has the more aggressive AI growth story. Its rapidly expanding revenues, large RPO, infrastructure investments and partnerships with major technology companies give it significant long-term potential. At the same time, high valuation, large losses, margin pressure and customer concentration make the story more dependent on successful execution.
Texas Instruments offers a more established financial foundation. The company is seeing strong growth across several end markets, expanding margins, generating substantial cash and returning billions of dollars to shareholders. Its lower P/S multiple also provides a more measured valuation framework.
View the Zacks #1 Rank List
Image: Shutterstock
Texas Instruments vs. Cerebras Systems: Which Chip Stock Has the Edge?
Key Takeaways
Texas Instruments Incorporated (TXN - Free Report) and Cerebras Systems Inc. (CBRS - Free Report) give investors exposure to very different semiconductor opportunities. Texas Instruments is a mature chipmaker with a broad analog and embedded-chip portfolio serving industrial, automotive, data center and consumer markets. Cerebras, meanwhile, is a newer AI-focused company that develops wafer-scale processors and solutions designed to handle AI inference workloads.
The contrast between the two companies is especially clear in their latest results. TXN is benefiting from a broad recovery in chip demand while producing strong profits and cash flow. CBRS is growing much faster, but that growth comes with significantly higher execution and profitability risks.
TXN: A Broad Recovery Is Driving Growth
Texas Instruments appears to be entering the second half of 2026 with considerable momentum. Second-quarter 2026 revenues increased 23% year over year to $5.46 billion, helped by strong demand across industrial, automotive and data center markets.
Industrial revenues rose roughly 30%, automotive revenues increased at a mid-teen rate, and data center revenues doubled from the year-ago period as AI infrastructure investment continued to expand. Management also expects demand to remain healthy in the third quarter, suggesting that the recovery is not limited to a single end market.
Texas Instruments is converting that revenue growth into stronger profits. Gross margin increased to 61.4% from 57.9% a year earlier, while operating margin expanded to 42.3% from 35.1%. As a result, second-quarter earnings per share (EPS) jumped 52% year over year to $2.14.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Texas Instruments Incorporated price-consensus-eps-surprise-chart | Texas Instruments Incorporated Quote
Texas Instruments also benefits from its large 300mm manufacturing footprint. These facilities can lower production costs and strengthen TXN's competitive position as chip volumes recover. Its broad analog portfolio and direct relationships with customers also provide a relatively stable business base.
Cash generation is another major advantage. Texas Instruments generated $6.5 billion in cash over the trailing 12 months and returned $5.8 billion to shareholders through dividends and share repurchases. This gives the company room to invest in capacity while continuing to reward investors.
The third-quarter outlook reinforces the positive trend. At the midpoints of its guidance ranges, revenues are expected to rise about 25% year over year, while EPS is projected to increase roughly 62%.
CBRS: Faster Growth but Much Higher Risk
Cerebras Systems presents a very different investment story. Its growth is considerably faster, driven by rising demand for AI computing and inference. Second-quarter 2026 core revenues surged 103% year over year to $209.9 million. Core cloud and services revenues were even stronger, jumping 287% to $127.7 million. The company expects full-year 2026 core revenues of $880 million to $890 million.
Cerebras Systems also ended the quarter with $25.4 billion in remaining performance obligations (RPO), which provides substantial potential revenue visibility. Its ability to convert those commitments into actual revenues, however, will depend on execution, manufacturing capacity and data center availability.
The company is rapidly expanding its infrastructure. Cerebras Systems has secured more than 600 megawatts of data center capacity, which is operational or is expected to come online by the end of 2027. Manufacturing capacity is expected to increase more than 10 times during 2026 and expand further in 2027.
Its architecture could also help it avoid some industry bottlenecks because Cerebras Systems does not require high-bandwidth memory, CoWoS packaging or leading-edge 3nm fabrication for its current approach. Partnerships with companies such as OpenAI, AWS and Advanced Micro Devices could further expand its AI footprint.
However, the financial risks are difficult to overlook. Cerebras Systems reported a GAAP net loss of $450.5 million in the second quarter, while its accumulated deficit reached roughly $1.4 billion. The company continues to spend heavily on research and development, cloud infrastructure and data center capacity.
Cerebras Systems Inc. Price, Consensus and EPS Surprise
Cerebras Systems Inc. price-consensus-eps-surprise-chart | Cerebras Systems Inc. Quote
Margins are also under pressure. Core gross margin fell 590 basis points sequentially to 40.6%, partly because Cerebras Systems temporarily rented systems from customers to meet strong inference demand. Management expects third-quarter core gross margin of 38%-40% and core operating margin of negative 25% to negative 23%.
This means CBRS is currently prioritizing expansion over near-term profitability. This strategy could pay off if AI demand remains strong, but it leaves less room for execution mistakes.
Customer concentration adds another layer of risk. Three customers accounted for 34%, 32% and 10% of second-quarter revenues, while a significant portion of the company's RPO is connected to its OpenAI agreement.
Valuation: TXN Offers a More Balanced Setup
Valuation highlights the different risk profiles of the two stocks.
Cerebras Systems trades at a forward 12-month price-to-sales (P/S) multiple of 21.40 compared with 10.48 for Texas Instruments. CBRS' premium is understandable, given its much faster growth, but investors are also paying more for a business that is still loss-making and heavily dependent on future execution.
Image Source: Zacks Investment Research
Both stocks have also struggled recently. TXN shares have declined 11% over the past three months, while CBRS shares have fallen 8.1%.
Image Source: Zacks Investment Research
The key difference is what investors are getting behind those stock prices and valuations. Texas Instruments already has substantial earnings, cash generation, manufacturing scale and a diversified customer base. Meanwhile, Cerebras Systems’ case suggests that investors need to keep faith in its future growth opportunity.
Conclusion: Texas Instruments Has the Edge
Though both companies currently carry a Zacks Rank #2 (Buy), TXN stock clearly has an edge over CBRS based on the above discussion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cerebras has the more aggressive AI growth story. Its rapidly expanding revenues, large RPO, infrastructure investments and partnerships with major technology companies give it significant long-term potential. At the same time, high valuation, large losses, margin pressure and customer concentration make the story more dependent on successful execution.
Texas Instruments offers a more established financial foundation. The company is seeing strong growth across several end markets, expanding margins, generating substantial cash and returning billions of dollars to shareholders. Its lower P/S multiple also provides a more measured valuation framework.