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TXN Surges 67% Over the Past Year: Is the Stock Still Worth Buying?
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Key Takeaways
Texas Instruments has gained 66.6% in a year, while Q2'26 revenues rose 23% and non-GAAP EPS climbed 52%.
Texas Instruments' data center revenues doubled year over year in Q2'26 and rose 20% sequentially.
Texas Instruments plans to make over 95% of wafers internally by 2030, backed by up to $9.5B in incentives.
Texas Instruments Incorporated (TXN - Free Report) has been one of the standout performers in the semiconductor industry over the past year. The stock has surged 66.6%, easily beating the broader Zacks Semiconductor – General industry, which advanced 34.6%.
TXN has also outperformed several major semiconductor names, including Broadcom Inc. (AVGO - Free Report) , QUALCOMM Incorporated (QCOM - Free Report) and NVIDIA Corporation (NVDA - Free Report) . Over the past year, shares of Broadcom, QUALCOMM and NVIDIA have risen 7.8%, 9.3% and 29.6%, respectively.
After such a strong rally, investors may wonder whether it is too late to buy Texas Instruments. In our view, the stock still has upside potential. Its valuation is high, but improving earnings, growing AI-related demand, strong cash generation and major manufacturing investments provide a solid foundation for further growth.
Texas Instruments' Strong Results Keep the Bull Case Alive
TXN's recent results show that the business is gaining momentum. Second-quarter 2026 revenues increased 23% year over year to $5.46 billion, while non-GAAP earnings rose 52% to $2.14 per share.
The guidance is equally encouraging. Texas Instruments expects third-quarter revenues of $5.65-$6.15 billion, with the midpoint representing about 25% year-over-year growth. The midpoint of its earnings per share guidance is $2.40, implying growth of nearly 62%. The guidance reflects healthy demand across several markets, particularly those tied to AI infrastructure.
Wall Street shares the same optimism. The Zacks Consensus Estimate calls for continued revenue and earnings growth in both 2026 and 2027, reinforcing confidence that the company's growth story is far from over.
Texas Instruments Sales and EPS Growth Forecast
Image Source: Zacks Investment Research
AI Is Becoming a Bigger Opportunity for Texas Instruments
Texas Instruments is not an AI accelerator company like NVIDIA or AMD, but it is becoming an important beneficiary of the AI boom. TXN makes analog and embedded chips that help manage power, process signals and control equipment used in data centers and industrial systems. As AI data centers become more powerful, they require more electricity and increasingly sophisticated power-management systems.
Instead of competing in the crowded AI processor market, the company is benefiting from the broader AI infrastructure buildout. This positions Texas Instruments to capture AI spending regardless of which GPU (graphics processing unit) maker ultimately dominates the data center market.
The numbers already reflect this trend. Texas Instruments' data center business reached an annual revenue run rate of approximately $1.2 billion in 2025, growing more than 50% year over year. During the second quarter of 2026, data center revenues doubled from the prior-year quarter and increased 20% sequentially.
Such strong growth suggests AI infrastructure could become an increasingly important revenue driver over the coming years. If AI data center investment remains strong, TXN's exposure could expand without requiring the company to compete directly in the highly competitive accelerator market.
Manufacturing Expansion Could Add to TXN’s Advantage
Texas Instruments is also investing heavily to bring more manufacturing in-house. Unlike many semiconductor companies that depend heavily on third-party foundries, TXN plans to produce more than 95% of its wafers internally by 2030.
While this strategy requires substantial capital spending, it could provide greater control over supply and improve cost efficiency. This could become an important competitive advantage as semiconductor demand grows.
Government support should also help reduce the financial burden. Texas Instruments expects to receive up to $1.6 billion in direct CHIPS Act grants and another $6-$8 billion from the U.S. Treasury Department's Investment Tax Credit. Including both, total lifetime benefits are estimated between $7.5 billion and $9.5 billion. These incentives should reduce expansion costs and boost profitability over the long run.
TXN’s Strong Cash Flow Supports More Investment and Returns
Texas Instruments' cash generation further strengthens its ability to invest while returning capital to shareholders. Over the past 12 months, the company generated $8.67 billion in operating cash flow and $6.53 billion in free cash flow. It ended the second quarter with $7 billion in cash and short-term investments.
The company also continues to reward investors. During the first half of 2026, TXN returned nearly $1.45 billion through dividends and share repurchases. Over the past year, total shareholder returns approached $6 billion.
The strong cash position allows Texas Instruments to invest aggressively in manufacturing expansion while continuing to reward shareholders.
Texas Instruments’ Premium Valuation May Be Justified
Texas Instruments is not a bargain stock. It currently carries a Value Score of D, reflecting its premium valuation. TXN currently trades at a forward 12-month P/E ratio of 30.99, well above the industry average of 19.04.
Texas Instruments Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Compared with other semiconductor leaders, Texas Instruments also trades at a higher earnings multiple than Broadcom, QUALCOMM and NVIDIA. At present, Broadcom, QUALCOMM and NVIDIA are trading at P/E multiples of 19.56, 17.97 and 17.67, respectively.
However, premium valuations are often justified when a company consistently delivers earnings growth, generates strong cash flow and maintains durable competitive advantages.
Texas Instruments fits that profile. The company continues to benefit from expanding AI infrastructure spending, generates substantial free cash flow, maintains a healthy balance sheet and has a long track record of rewarding shareholders through dividends and share buybacks. Those strengths make its premium valuation easier to justify.
Final Verdict: TXN Stock Is Still Worth Buying
Texas Instruments has already delivered an impressive 66.6% gain over the past year, but the investment story is not over.
While the stock is not inexpensive, the underlying business remains strong enough to support the premium. The company's accelerating earnings, strong data center growth, expanding AI exposure and manufacturing investments point to further long-term opportunities. Its strong cash generation also gives it flexibility to invest while continuing to reward shareholders.
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TXN Surges 67% Over the Past Year: Is the Stock Still Worth Buying?
Key Takeaways
Texas Instruments Incorporated (TXN - Free Report) has been one of the standout performers in the semiconductor industry over the past year. The stock has surged 66.6%, easily beating the broader Zacks Semiconductor – General industry, which advanced 34.6%.
TXN has also outperformed several major semiconductor names, including Broadcom Inc. (AVGO - Free Report) , QUALCOMM Incorporated (QCOM - Free Report) and NVIDIA Corporation (NVDA - Free Report) . Over the past year, shares of Broadcom, QUALCOMM and NVIDIA have risen 7.8%, 9.3% and 29.6%, respectively.
After such a strong rally, investors may wonder whether it is too late to buy Texas Instruments. In our view, the stock still has upside potential. Its valuation is high, but improving earnings, growing AI-related demand, strong cash generation and major manufacturing investments provide a solid foundation for further growth.
Texas Instruments One-year Price Return Performance
Image Source: Zacks Investment Research
Texas Instruments' Strong Results Keep the Bull Case Alive
TXN's recent results show that the business is gaining momentum. Second-quarter 2026 revenues increased 23% year over year to $5.46 billion, while non-GAAP earnings rose 52% to $2.14 per share.
The guidance is equally encouraging. Texas Instruments expects third-quarter revenues of $5.65-$6.15 billion, with the midpoint representing about 25% year-over-year growth. The midpoint of its earnings per share guidance is $2.40, implying growth of nearly 62%. The guidance reflects healthy demand across several markets, particularly those tied to AI infrastructure.
Wall Street shares the same optimism. The Zacks Consensus Estimate calls for continued revenue and earnings growth in both 2026 and 2027, reinforcing confidence that the company's growth story is far from over.
Texas Instruments Sales and EPS Growth Forecast
Image Source: Zacks Investment Research
AI Is Becoming a Bigger Opportunity for Texas Instruments
Texas Instruments is not an AI accelerator company like NVIDIA or AMD, but it is becoming an important beneficiary of the AI boom. TXN makes analog and embedded chips that help manage power, process signals and control equipment used in data centers and industrial systems. As AI data centers become more powerful, they require more electricity and increasingly sophisticated power-management systems.
Instead of competing in the crowded AI processor market, the company is benefiting from the broader AI infrastructure buildout. This positions Texas Instruments to capture AI spending regardless of which GPU (graphics processing unit) maker ultimately dominates the data center market.
The numbers already reflect this trend. Texas Instruments' data center business reached an annual revenue run rate of approximately $1.2 billion in 2025, growing more than 50% year over year. During the second quarter of 2026, data center revenues doubled from the prior-year quarter and increased 20% sequentially.
Such strong growth suggests AI infrastructure could become an increasingly important revenue driver over the coming years. If AI data center investment remains strong, TXN's exposure could expand without requiring the company to compete directly in the highly competitive accelerator market.
Manufacturing Expansion Could Add to TXN’s Advantage
Texas Instruments is also investing heavily to bring more manufacturing in-house. Unlike many semiconductor companies that depend heavily on third-party foundries, TXN plans to produce more than 95% of its wafers internally by 2030.
While this strategy requires substantial capital spending, it could provide greater control over supply and improve cost efficiency. This could become an important competitive advantage as semiconductor demand grows.
Government support should also help reduce the financial burden. Texas Instruments expects to receive up to $1.6 billion in direct CHIPS Act grants and another $6-$8 billion from the U.S. Treasury Department's Investment Tax Credit. Including both, total lifetime benefits are estimated between $7.5 billion and $9.5 billion. These incentives should reduce expansion costs and boost profitability over the long run.
TXN’s Strong Cash Flow Supports More Investment and Returns
Texas Instruments' cash generation further strengthens its ability to invest while returning capital to shareholders. Over the past 12 months, the company generated $8.67 billion in operating cash flow and $6.53 billion in free cash flow. It ended the second quarter with $7 billion in cash and short-term investments.
The company also continues to reward investors. During the first half of 2026, TXN returned nearly $1.45 billion through dividends and share repurchases. Over the past year, total shareholder returns approached $6 billion.
The strong cash position allows Texas Instruments to invest aggressively in manufacturing expansion while continuing to reward shareholders.
Texas Instruments’ Premium Valuation May Be Justified
Texas Instruments is not a bargain stock. It currently carries a Value Score of D, reflecting its premium valuation. TXN currently trades at a forward 12-month P/E ratio of 30.99, well above the industry average of 19.04.
Texas Instruments Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
Compared with other semiconductor leaders, Texas Instruments also trades at a higher earnings multiple than Broadcom, QUALCOMM and NVIDIA. At present, Broadcom, QUALCOMM and NVIDIA are trading at P/E multiples of 19.56, 17.97 and 17.67, respectively.
However, premium valuations are often justified when a company consistently delivers earnings growth, generates strong cash flow and maintains durable competitive advantages.
Texas Instruments fits that profile. The company continues to benefit from expanding AI infrastructure spending, generates substantial free cash flow, maintains a healthy balance sheet and has a long track record of rewarding shareholders through dividends and share buybacks. Those strengths make its premium valuation easier to justify.
Final Verdict: TXN Stock Is Still Worth Buying
Texas Instruments has already delivered an impressive 66.6% gain over the past year, but the investment story is not over.
While the stock is not inexpensive, the underlying business remains strong enough to support the premium. The company's accelerating earnings, strong data center growth, expanding AI exposure and manufacturing investments point to further long-term opportunities. Its strong cash generation also gives it flexibility to invest while continuing to reward shareholders.
Currently, Texas Instruments carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.