Key Takeaways:
- Strategic Expansion: Texas Instruments completed a major embedded strategy shift with the Silicon Labs acquisition, adding over 1200 wireless products and targeting 450 million in annual synergies by year 3.
- Manufacturing Advantage: Texas Instruments leverages internal 300 millimeter fabs to internalize about 75% of Silicon Labs volume by 2030, strengthening cost control and supply reliability.
- Price Target: Based on 11% revenue growth, 39% operating margins, and a 30 times exit multiple, Texas Instruments stock could reach $323 by December 2028.
- Return Profile: From the current price of $223, Texas Instruments implies 45% total upside, translating to a 14% annualized return over the next 3 years.
Texas Instruments (TXN) designs and manufactures analog and embedded semiconductors with scale leadership across industrial and automotive markets, supporting a market capitalization near $200 billion.
Last Wednesday, Texas Instruments announced the acquisition of Silicon Labs for $231 per share, expanding wireless connectivity exposure and embedded processing depth.
Specifically, Texas Instruments generated $18 billion in revenue in the last twelve months, which indicates sustained demand across industrial and automotive customers despite cyclical pressure.
Moreover, Texas Instruments delivered about $6 billion in operating profit with operating margins near 35%, therefore reinforcing a structurally profitable manufacturing and portfolio model.
However, while Texas Instruments trades near 30 times earnings even as margins recover toward 39%, the valuation tension raises questions about how much execution strength is already priced in.
What the Model Says for TXN Stock
Texas Instruments pairs scale manufacturing with 100% free cash flow returns, supporting steady cash generation and durable industrial positioning.
The model assumes 11% revenue growth, 39% operating margins, and a 30x exit multiple, producing $324 target.
Therefore, from $224 today, the forecast implies 45% total upside and 14% annualized return over 3 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for TXN stock:
1. Revenue Growth: 10.8%
Texas Instruments revenue reached about $18 billion LTM after declines in 2023 and 2024, showing stabilization from industrial and automotive demand.
Moreover, embedded processing expansion and added wireless connectivity from Silicon Labs support growth above recent averages, while cyclical recovery limits extreme acceleration.
However, industrial exposure and capital spending cycles constrain sustained upside, keeping growth expectations below earlier double digit periods.
According to consensus analyst estimates, 10.6% revenue growth balances portfolio expansion, manufacturing scale, and realistic end market normalization.
2. Operating Margins: 39.2%
Evidently, Texas Instruments delivered operating margins near 35% recently, supported by internal manufacturing, high gross margins, and disciplined operating expenses.
Additionally, increased internalization of Silicon Labs production and 300 millimeter fab utilization improve cost absorption and pricing leverage over time.
Nonetheless, margin recovery remains sensitive to utilization rates and mix shifts, especially if industrial demand softens again.
In line with analyst consensus projections, 39.2% operating margins reflect normalization toward historical efficiency without assuming peak cycle profitability.
3. Exit P/E Multiple: 29.9x
Texas Instruments has traded near 27x to 32x earnings during stable cycles, reflecting durable cash generation and strong capital returns.
Furthermore, consistent dividends and buybacks support valuation resilience, although slower growth tempers investor willingness to pay premium multiples.
Conversely, cyclical risk and elevated starting valuation limit expansion beyond recent trading ranges, requiring execution consistency to hold sentiment.
Based on street consensus estimates, a 29.9x exit multiple supports a $324 target, implying 45% total upside and 14% annual return.
What Happens If Things Go Better or Worse?
Texas Instruments stock outcomes depend on industrial demand recovery, internal manufacturing efficiency, and embedded portfolio execution, setting up a range of possible paths through 2030.
- Low Case: If industrial demand stays muted and utilization lags, revenue grows around 8.8% and margins stay near 31.3% → 6.5% annualized return.
- Mid Case: With core industrial recovery and steady execution, revenue growth near 9.8% and margins improving toward 33.5% → 11.6% annualized return.
- High Case: If embedded expansion and manufacturing leverage accelerate, revenue reaches about 10.8% and margins approach 35.2% → 16.2% annualized return.
How Much Upside Does It Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
