Key Stats for Texas Instruments Stock
- Past-Week Performance: -3%
- 52-Week Range: $140 to $231.3
- Current Price: $212.6
What Happened?
Texas Instruments (TXN) has quietly staged one of the semiconductor sector’s most disciplined recoveries, with its stock trading at $212.6 while the company projects more than $8 per share in free cash flow for 2026, a figure that reframes TXN less as a cyclical chipmaker and more as a cash-generation machine entering its most efficient era yet.
Driving that rerating, management itself delivered the flashpoint last Wednesday during the Capital Management Call, where CEO Haviv Ilan and CFO Rafael Lizardi outlined a decisive CapEx reduction from $4.6 billion in 2025 to a $2 to $3 billion range in 2026, signaling the end of a six-year elevated investment cycle and the beginning of a sustained free cash flow harvest.
Powering the financial inflection, TXN’s full-year 2025 revenue surged 13% to $17.7 billion while free cash flow per share nearly doubled to $3.2, driven by double-digit industrial growth of 12%, data center expansion of 64%, and the structural cost advantages of its growing 300-millimeter wafer manufacturing footprint across Richardson, Lehi, and Sherman.
Beyond the numbers, the market is fundamentally rethinking TXN’s identity, as the company transitions from a capital-intensive builder to a modular-capacity, high-return operator where 75% of revenue now flows from industrial, automotive, and data center versus just 43% in 2013, compressing the cyclicality discount that once haunted the stock.
CFO Rafael Lizardi stated on the Q4 earnings call that “free cash flow for 2025 was $2.9 billion or 17% of revenue, representing an increase of 96% from 2024,” contextualizing TI’s sharpest annual free cash flow acceleration in recent history as the company exits its heaviest-ever capacity investment cycle.
Adding institutional conviction, TI’s capital return posture reinforces professional confidence, with the company ranking in the 94th percentile of the S&P 500 for cash returns, having distributed $6.5 billion to shareholders in 2025 while maintaining $20 billion in open buyback authorizations and delivering a 4% dividend increase marking 22 consecutive years of dividend growth.
Looking out three to five years, TI’s combination of 95%-plus internal wafer sourcing by 2030, geopolitically dependable U.S.-based capacity, the pending Silicon Labs acquisition closing in the first half of 2027, and accelerating data center penetration currently running at a $450 million quarterly rate positions TXN to widen its competitive moat precisely as global semiconductor supply chains restructure around domestic manufacturing.
Wall Street’s Take on TXN Stock
With TI’s six-year elevated CapEx cycle now ending and free cash flow per share nearly doubling to $3.2 in 2025, the company’s forward earnings trajectory shifts decisively toward harvest mode, directly accelerating the path to management’s $8-plus FCF per share target for 2026.
Underlying that confidence, Street estimates project revenue growing 10.8% to $19.6 billion in 2026 while normalized EPS accelerates 15.5% to $6.5, continuing a recovery arc that already delivered 13% revenue growth and 4.7% EPS growth in 2025 after two consecutive years of double-digit declines.
Wall Street currently shows 12 buys, 2 outperforms, 18 holds, and 4 sells against a mean price target of $221.6, implying just 4.2% upside from TXN’s current price of $212.6, suggesting analysts are holding conviction on the recovery thesis but awaiting cleaner evidence of industrial demand sustainment before aggressively upgrading.
The analyst target range spans $160 to $270, where the low reflects persistent industrial demand softness and multiple compression risk while the high requires data center revenue to sustain its 7-consecutive-quarter growth streak and industrial bookings acceleration confirmed in Q4 to translate into durable revenue beats through mid-2026.
What Does the Valuation Model Say?
Given that TI’s modular capacity infrastructure, growing 300mm footprint, and Silicon Labs acquisition closing in the first half of 2027 collectively support a durable compounding narrative, TIKR’s mid-case valuation prices TXN at $406.7, implying a 91.3% total return and 14.3% annualized IRR through December 2030.
The most credible bear risk sits in depreciation, which management guided to $2.2 to $2.4 billion in 2026, a roughly $400 million step-up from 2025’s $1.9 billion, creating margin headwinds that could compress EBIT margins further below the already-reduced 34.1% recorded in 2025 if revenue growth disappoints consensus.
TXN looks attractively positioned for patient investors willing to look past near-term margin pressure, with the CapEx-to-FCF inflection already underway, industrial recovery bookings strengthening, and a valuation model pointing toward 14.3% annualized returns contingent on Silicon Labs closing cleanly and data center momentum holding through 2027.
Should You Invest in Texas Instruments Incorporated?
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