TEXAS INSTRUMENTS INCORPORATED (TXN): what the price assumes

In the published model solve dated 2026-Q2, anchored at $258.59, TEXAS INSTRUMENTS INCORPORATED (TXN) is priced for today's economics sustained for ~8.9 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/TXN

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.2% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Texas Instruments makes analog and embedded chips, the unglamorous components inside nearly every electronic device, and it just came off the bottom of a cyclical downturn: Q1 2026 revenue rose 19% year over year with industrial up about 30% and data center up about 90%.
• The chief risk is macro and geographic: products shipped into China represented about 50% of TI's revenue in 2025 per the 10-K (accession 0000097476-26-000059), so trade policy and Chinese industrial demand swing the results more than any single product decision.
• Watch the July 22 Q2 report against guidance of $5.0 to $5.4 billion revenue, and the capex cliff, with a six-year, $20B-plus fab buildout ending and 2026 capex guided down to $2 to $3 billion, which is what turns TI's cash flow from constrained to abundant.

Bull Case

Read TI as a cyclical business at the point in its cycle where two things turn up at once: demand and free cash flow. The demand recovery is already on the tape. Revenue grew 19% year over year and 9% sequentially in the first quarter of 2026, led by industrial up roughly 30% and data center up roughly 90%, with gross margin expanding to 58% and Q2 guidance pointing to the low-to-mid 59% range as 300mm factory utilization climbs. For an analog company whose margins are dominated by how full its factories run, rising utilization off a trough is the whole earnings-leverage story. The 10-K names the structural edge behind it: manufacturing that "provides lower costs and greater control of our supply chain" and "a broad portfolio of analog and embedded processing products that offers more opportunity per customer" (accession 0000097476-26-000059).

The second turn is the capex cliff, and it is the more underappreciated one. TI spent six years and more than $20 billion building 300mm capacity, and that program is now concluding, with 2026 capital spending guided down to $2 to $3 billion. Trailing free cash flow already rose to about $4.4 billion at the end of the first quarter from $1.7 billion a year earlier. When a heavy building phase ends while revenue is rising, free cash flow does not improve gradually; it steps up, because the same factory base now serves more demand at far lower incremental cost. TI owns that fresh, largely-paid-for 300mm base in the U.S. at exactly the moment demand for domestically-made analog chips is prized.

The franchise durability justifies treating the recovery as more than a bounce. The analog and embedded markets are, in TI's own words, "highly" fragmented and competitive despite consolidation (same accession), which sounds like a negative but is why no single competitor can take TI's tens of thousands of catalog parts embedded across decades of customer designs. Return on equity runs 32%, the balance sheet scores near the top of the solvency scale, and the company returned about $6 billion over the trailing year in dividends and buybacks while shares shrank. The dividend has grown for two decades. The bull case is a best-in-class cyclical catching an up-cycle just as its investment phase ends, with the cash flow inflection still ahead.

Bear Case

The variable with the most leverage over this thesis is one TI does not control: Chinese demand and the trade rules around it. The 10-K states that products shipped into China represented about 50% of TI's revenue in 2025, with customers headquartered in China at about 20% (accession 0000097476-26-000059). That is enormous concentration in a single market that is simultaneously TI's largest customer, its most aggressive domestic-competitor incubator, and the focus of escalating semiconductor trade restrictions. A tariff round, an export-control tightening, or a push by Beijing toward home-grown analog suppliers does not trim TI's growth at the margin; it strikes half the revenue base. The current up-cycle is being priced as clean secular growth, but a business with this China exposure carries a policy tail the multiple is not dwelling on.

The cyclicality itself is the second problem, and the price treats a peak as a plateau. TI's own risk language ties its profitability to "our ability to utilize our manufacturing facilities at sufficient levels to cover our fixed operating costs, in an intensely competitive and cyclical industry" (same accession). The margins expanding today on rising utilization are the same margins that compressed on the way down, and the recent 19% year-over-year growth is a recovery off a depressed base, not a new run-rate. The just-completed $20 billion capacity buildout adds fixed costs that punish the next downturn harder: more factory to keep full when demand next rolls over. Analog demand is broad but not immune, and the filing warns that a decline in "one or more sectors within our markets" can materially hurt results.

The valuation is where the bear case sharpens to a point. At about 46 times company-wide operating income, the price embeds growth held near the fastest pace the business can self-fund for roughly 12 years, a multiple the framework places at the very top of the semiconductor peer distribution, well beyond the upper quartile. Not one valuation family reaches the price: asset value reads it at about 5 times, earnings power at about 6 times, and even the forward-growth lens at 1.5 times what it supports. On a 53 times trailing earnings multiple against a sector median of 22, TI is priced like a secular grower rather than the elite cyclical it is. The dividend, at a 96.7% payout of net income, also leaves little room, since a cyclical dividend covered 96 cents on the dollar of earnings is fully exposed if the next trough arrives before free cash flow fully inflects. The bear case is not that TI is a weak company; it is that the market is paying a peak-cycle, secular-growth price for a China-exposed cyclical.

Valuation

At $311.49 (July 11, 2026), Texas Instruments trades at about 46 times company-wide operating income, which embeds operating growth held near the company's self-funding ceiling for roughly 12 years. The recent pace supports the rate, revenue grew 19% year over year last quarter, but the framework flags the assumption as high, a demanding bet on continued execution, and places the multiple at the very top of the semiconductor peer distribution, well beyond the upper quartile. The most useful way to read that is against TI's nature: this is an elite cyclical, and a cyclical priced at the top of the cycle is paying for the recovery to keep running with no interruption, which the base rate does not favor, since only about 15% of comparable fast-growers sustained such a pace even ten years.

Every valuation family agrees the price sits above what it supports, which is the signal rather than a contradiction. The asset-value lens reads the price at about 5 times, earnings power at about 6 times, the peer-multiple lens at about 3 times, and even the forward-growth projection at 1.5 times what it justifies. The stock's 53 times trailing earnings against a semiconductor-sector median of 22, and 42 times EV/EBITDA against a 16 median, is the concrete version of that gap. The one method that comes closest is the exit-multiple cash-flow projection, and it gets there only by holding today's roughly 42 times EV/EBITDA multiple flat for the life of the forecast, which is the assumption in question, not the answer. The filing-sourced foundation is genuinely strong, TI's manufacturing edge that "provides lower costs and greater control of our supply chain" (accession 0000097476-26-000059) is real, but a strong franchise and a stretched price are different questions.

Solvency is not a concern: leverage is moderate and well covered, the current ratio is 4.46, and return on equity runs 32%. Two numbers need their bases stated to stay coherent. The dividend is $5.68 per share on the current annualized rate, a 1.8% yield, but it consumes 96.7% of trailing net income, so its comfort depends on the free-cash-flow inflection as capex falls, not on current earnings coverage. And the trailing free cash flow of $3.72 billion, an FCF yield near 1.3% on the market cap, is depressed by the tail of the $20 billion buildout; the bull's cash-flow step-up is real but has not yet fully arrived. What the buyer at $311.49 is underwriting is that a China-exposed, peak-cycle analog leader keeps compounding at top-of-peer rates for over a decade; the methods are unanimous that the price already banks that outcome.

Catalysts

The April 22 first-quarter report was a beat-and-raise that confirmed the cyclical upturn. Revenue of $4.83 billion came in above the top of guidance, up 19% year over year and 9% sequentially, with net income of $1.55 billion and EPS of $1.68, led by industrial up about 30% and data center up about 90%. Gross margin expanded to 58%, and TI guided Q2 2026 revenue to $5.0 to $5.4 billion and EPS to $1.77 to $2.05, a midpoint roughly 8% above the quarter and slightly ahead of normal seasonality, with gross margin guided toward the low-to-mid 59% range as 300mm utilization builds. The company also guided 2026 capex down to $2 to $3 billion, marking the end of the multi-year buildout.

The forward calendar centers on the July 22 second-quarter report, which will test whether the industrial and data-center momentum holds and whether the margin step-up lands as guided. A management change is underway: Julie Knecht was named CFO with Rafael Lizardi retiring in August 2026. Analyst sentiment turned notably more bullish through June and July, with BofA raising its target to $370 from $320, UBS to $350 from $295, Stifel to $360 from $340, and Cantor Fitzgerald to $340 from $300, even as the broader covering consensus mean sat closer to $294 to $298. That spread, sharply higher individual targets against a more cautious mean, captures the debate exactly: the bulls are pricing the free-cash-flow inflection as capex falls, while the mean still reflects the peak-cycle valuation and the China-exposure risk.

Peer Cohorts (Per Segment, With Filing Citations)

Analog (reported)

• ADI (ANALOG DEVICES INC)
• FY2025 10-K: …Analog Devices or the Company) is a global semiconductor leader dedicated to solving our customers' most complex engineering challenges. We deliver innovations that connect technology to human breakthroughs and play a critical role at the intersection of the physical and digital worlds by providing the building…
• FY2025 10-K: …Edge and will continue to be a critical partner in the collection, creation and communication of our customers' edge data. In addition, we incorporate AI capabilities across our technologies, business operations, products and services to enhance performance and drive smarter, more efficient solutions. We were…
• MPWR (MONOLITHIC POWER SYSTEMS INC)
• FY2025 10-K: …partners utilize prior to shipping to our customers. The manufacturing facilities we utilize in Asia enable us to benefit from shorter manufacturing cycle times and lower labor and overhead costs. We have expanded our product testing capabilities in these facilities and are able to take advantage of the rich pool of…
• FY2025 10-K: …of such products. We consider our primary competitors to include Analog Devices, Infineon Technologies, NXP Semiconductors, ON Semiconductor, Power Integrations, Renesas Electronics, ROHM Semiconductor, Semtech, STMicroelectronics and Texas Instruments. 9 Table of Contents We expect continued competition from…
• MCHP (MICROCHIP TECHNOLOGY INCORPORATED)
• FY2025 10-K: …product line decreased approximately 42.6% in fiscal 2025 compared to fiscal 2024. The decrease in net sales was primarily due to adverse economic conditions, including slowing economic activity, increasing business uncertainty, persistent inflation, high interest rates, and shorter product lead times, which factors…
• FY2025 10-K: …marketing, distribution and other resources than we have with which to pursue engineering, manufacturing, marketing and distribution of their products. We also compete with a number of companies that we believe have copied, cloned, pirated or reverse engineered our proprietary product lines in such countries as China…
• NXPI (NXP Semiconductors N.V.)
• FY2025 10-K: …lines. Many of our competitors are focused on single applications or market segments. Most of our competitors compete with us with respect to some, but not all, of our product lines. Our primary key public competitors in alphabetical order include, but are not limited to, Analog Devices Inc., Broadcom Inc., Infineon…
• FY2025 10-K: …defined vehicle (SDV) middleware for the growing ecosystems in & around vehicles, smart factories, robotics, homes and buildings. Enabling innovation at our customers as well as reducing complexity, integration efforts and shorten time to market is a key element of our strategy. We believe we have the broadest Arm…
• ON (ON Semiconductor Corporation)
• FY2025 10-K: ;term gross margin expansion and enable efficient scaling of differentiated high‑value power products. AMG AMG designs and develops a comprehensive range of analog and mixed-signal solutions including power‑management, sensor‑interface, connectivity, and standard products that serve automotive, industrial automation,…
• FY2025 10-K: …personnel. Our competitive position with respect to the above is enhanced by long-standing relationships with leading customers. Our ability to compete successfully depends on internal and external variables. These variables include, but are not limited to, the timeliness with which we can develop new products and…
• QRVO (Qorvo, Inc.)
• FY2025 10-K: …by rapid advances in technology and new product introductions. Our customers' product life cycles can be short, especially in mobile devices, and our competitiveness depends on our ability to improve our products and processes faster than our competitors, anticipate changing customer requirements and successfully…
• FY2025 10-K: …to submit such files). Yes þ No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or Table of Contents an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller…
• SWKS (SKYWORKS SOLUTIONS, INC.)
• FY2025 10-K: …5,200 worldwide issued patents and other intellectual property that we own and control. Together, our industry-leading technology enables us to deliver the highest levels of product performance and integration. Customer Relationships Given our scale and technology leadership, we are engaged with leading original…
• FY2025 10-K: …become more intuitive and integrated, we believe this could drive an inflection in upgrade cycles, leading to a potential tailwind to volumes and content over time. Finally, with the rapid transition towards electrification and advanced safety in vehicles, we are focused on high growth segments and content…

Embedded Processing (reported)

• MCHP (MICROCHIP TECHNOLOGY INCORPORATED)
• FY2025 10-K: …its subsidiaries. Item 1. Business Overview We develop, manufacture and sell smart, connected and secure embedded control solutions used by our customers for a wide variety of applications. Our strategic focus includes general purpose and specialized 8-bit, 16-bit, and 32-bit mixed-signal microcontroller,…
• FY2025 10-K: …marketing, distribution and other resources than we have with which to pursue engineering, manufacturing, marketing and distribution of their products. We also compete with a number of companies that we believe have copied, cloned, pirated or reverse engineered our proprietary product lines in such countries as China…
• NXPI (NXP Semiconductors N.V.)
• FY2025 10-K: …of innovation and operating history. For the year ended December 31, 2025, we generated revenue of $12,269 million, compared to $12,614 million for the year ended December 31, 2024. We provide leading solutions that leverage our combined portfolio of intellectual property, deep application knowledge, process…
• FY2025 10-K: …defined vehicle (SDV) middleware for the growing ecosystems in & around vehicles, smart factories, robotics, homes and buildings. Enabling innovation at our customers as well as reducing complexity, integration efforts and shorten time to market is a key element of our strategy. We believe we have the broadest Arm…
• ADI (ANALOG DEVICES INC)
• FY2025 10-K: …end customers. Our analog ICs typically have long product life cycles. Our customers include original equipment manufacturers (OEMs) and customers who build electronic subsystems for integration into larger systems. We continue to expand our capabilities in software, digital platforms and AI to support the evolving…
• FY2025 10-K: …These include devices that shape the signal for transmission over the medium or reconstruct the received signal after transmission to recover the intended signal integrity. • Software, Digital Platforms and Artificial Intelligence -As part of our evolution from a component supplier to a full-system and solutions…
• STM (STMicroelectronics N.V.)
• FY2025 20-F: …Discrete products ("P&D") reportable segment to Analog products, MEMS and Sensors ("AM&S") reportable segment. • In Microcontrollers, Digital ICs and RF products (MDRF) Product Group: • the newly created ‘Embedded Processing' reportable segment includes the former ‘MCU' segment (excluding the RF ASICs mentioned…
• FY2025 20-F: …generate value for us and our customers. Our complete design platforms, including a large selection of IP and silicon-proven models and design rules, enable the fast development of products designed to meet customer expectations in terms of reliability, quality, competitiveness in price and time-to-market. Through…
• ON (ON Semiconductor Corporation)
• FY2025 10-K: …Actual results may differ from the estimates and assumptions used in the consolidated financial statements. Revenue Recognition . We generate revenue from sales of our semiconductor products to direct customers and distributors. We also generate revenue, to a much lesser extent, from product development agreements…
• FY2025 10-K: …Indirect Time of Flight sensors Gate Driver products See Note 3: ''Segments and Revenue'' in the notes to our audited consolidated financial statements included elsewhere in this Form 10-K for other information regarding our segments, their revenue and gross profit derived from each segment. Products and Technology…
• SLAB (SILICON LABORATORIES INC.)
• FY2025 10-K: …in mixed-signal ICs is the result of the breadth of engineering talent we have assembled with experience working in analog-intensive CMOS design for a wide variety of applications. This expertise, which we consider a competitive advantage, is the foundation of our in-depth understanding of the technology and trends…
• FY2025 10-K: …all design wins ultimately result in revenue or may result in less revenue than expected. However, once a completed design architecture has been implemented and produced in high volumes, our customers are reluctant to significantly alter their designs due to this extensive design-win process. We believe this process,…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.