Key Stats for TXN Stock
- Past-30-Day Performance: -8%
- 52-Week Range: $139 to $231
- Valuation Model Target Price: $288
- Implied Upside: 47%
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What Happened?
Texas Instruments has fallen out of favor recently as investors rotate toward faster-growing AI semiconductor names, leaving the stock under pressure despite improving long-term fundamentals. Shares fell about 8% over the past 30 days, trading near $194 per share, as sentiment weakened heading into earnings, as shown in the recent price trend.
Shares declined primarily because investors are concerned that Texas Instruments’ industrial segment, which drives a large portion of revenue, remains weak and is still about 25% below its prior peak, delaying earnings recovery and margin expansion. This slower recovery has reduced near-term earnings visibility and delayed margin expansion.
At the same time, competitors like Analog Devices and ON Semiconductor are seeing stronger near-term growth driven by electrification and AI-related demand, which has made Texas Instruments’ slower industrial recovery stand out more to investors.
This month, management said at a Morgan Stanley conference that the company expects at least $8 in free cash flow per share in 2026, with industrial, automotive, and data center markets making up about 75% of revenue.
Data center demand is becoming a more meaningful contributor, growing about 70% year-over-year and reaching roughly 10% to 11% of the business, while the company continues preparing capacity and inventory for a potential recovery. CEO Haviv Ilan said, “We want to be ready for each and every opportunity.”
Institutional activity reflected mixed positioning. James Hambro & Partners LLP reduced its stake by 3.2%, while Donaldson Capital Management cut its position by 93.7%, and Wedge Capital Management lowered its stake by 23.5%, signaling selective selling.
At the same time, firms including J. Safra Sarasin Holding AG, Mn Services, Exchange Traded Concepts, Generali Investments CEE, and Dakota Wealth Management increased their positions, while Canoe Financial initiated a new stake worth about $59 million.
Recent analyst targets remain clustered around the low-$220 range, suggesting a cautious near-term outlook ahead of the company’s earnings report on April 22, 2026.
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Is TXN Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 10%
- Operating Margins: 39%
- Exit P/E Multiple: 25x
Revenue is expected to recover gradually as industrial and automotive demand normalizes, supported by increasing semiconductor content in vehicles and steady demand across factory automation and infrastructure markets.
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Texas Instruments’ manufacturing strategy is a key driver, as its shift toward 300mm wafer production lowers cost per chip and supports margin expansion as utilization improves.
The company also benefits from analog chips with long product lifecycles and high switching costs, which help maintain pricing stability and support consistent free cash flow even during slower demand periods.
Earnings growth is closely tied to inventory normalization, where a shift from customer inventory digestion to restocking would lift revenue and improve utilization, directly supporting margins.
Based on these inputs, Texas Instruments appears undervalued at current levels, with future performance driven by industrial recovery, margin expansion from internal manufacturing, and steady capital returns rather than rapid top-line growth.
How Much Upside Does TXN Stock Have From Here?
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- Revenue Growth
- Operating Margins
- Exit P/E Multiple
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