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Analog-led demand is the clearest opportunity because Analog was the dominant FY2025 segment.
Capex-to-depreciation remains above 1.5x in FY2030.
Sell. At the September 8, 2026 report-date price of $258.92, the shares exceed Fair value of $109.62 and Potential value of $137.20.3
The main risk is that heavy factory investment fails to produce enough demand or margin. Reinvestment would remain high, delaying stronger free cash flow and weakening value per share.45
The clearest upside is an Analog-led recovery that fills the added capacity. If capital spending also normalizes, sales, profit, and free cash flow could improve together.
FY2027 analyst forecasts average $24.93 billion of revenue, supporting a demand-led recovery if customers rebuild orders and Analog participates.1
Sell because the report-date price stands well above Fair value, while capital conversion remains unproven.34
FY2027 analyst forecasts average $24.93 billion of revenue, supporting a demand-led recovery if customers rebuild orders and Analog participates.1
Sell because the report-date price stands well above Fair value, while heavy factory investment has not yet produced enough free cash flow to support that valuation.345
TEXAS INSTRUMENTS INCORPORATED designs and manufacture semiconductors that the company sells to electronics designers and manufacturers all over the world. Its operations began in 1930, and the company is incorporated in Delaware. With headquarters in Dallas, Texas, the company has design, manufacturing or sales operations in more than 30 countries.
Its Analog segment includes the following major product lines: Power and Signal Chain. Its Embedded Processing segment includes microcontrollers, processors, wireless connectivity and radar products. Microcontrollers are self-contained systems with a processor core, memory and peripherals that are designed to control a set of specific tasks for electronic equipment and often integrate analog functionality.
Customer Number One supplied 12% of FY2025 revenue. A loss, repricing, or in-sourcing event would reduce sales and factory use together.
This path would reduce sales, margin, earnings, and free cash flow together. It is disconfirmed by sustained Analog growth, improving margins, and lower capital intensity.
If GAAP operating margin stays below 30% for two fiscal years after FY2027, weak utilization or pricing would impair earnings and cash flow.
If FY2030 capex-to-depreciation remains above 1.5x, reinvestment stays high and dividend coverage remains structurally weak.
The five developments that would weaken our investment case.
Persistent weak profitability would show that added factories remain underused or pricing has weakened, reducing operating earnings and free cash flow.
Current:34.06% in FY2025
Alert ifBelow 30% for two consecutive fiscal years after FY2027
Switching costs, software integration, distribution reach, and installed-base advantages remain unknown here. Profitability and accounting outcomes do not show whether customers face barriers to switching.
The peer group is only a cross-check because its growth, margins, and valuations vary widely. Even so, lower pricing or lost business could reduce factory use and profit margins.
FY2025 operating income was $6.02 billion on $17.68 billion of revenue. Those results show profitability, but they do not by themselves prove durable pricing power.5
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Apply a terminal P/E to the dated forward path, then discount that future share value back to the analysis date.
None of the valuation methods used to calculate Fair value relies on a separate assumption about how long the competitive advantage lasts.
The highlighted cell is Fair value when every assumption sits at its base level ($109.62). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $4.0B after modeled reinvestment of $2.5B, with terminal value at 52.0% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
The path is supported if FY2027 revenue and diluted EPS remain within their dated forecast ranges. Results below those ranges would weaken the expected recovery.1
This combination would show that the revenue recovery is reaching profit and cash rather than being absorbed by continued heavy investment.
Meeting forecasts would support the expected recovery, but continued heavy capital spending relative to free cash flow would leave the investment burden unresolved.
Lower revenue would weaken the recovery. Falling operating income or free cash flow would show that less profit and cash are reaching shareholders.
The wide FY2027 revenue and diluted-EPS ranges show meaningful outcome uncertainty.1
Growth must absorb factory costs and support consolidated profit.6
FY2025 free cash flow was $2.60 billion against $4.55 billion of capex. Cash improvement depends on utilization lifting profit while spending moves toward maintenance needs.45
The build remains the central allocation decision. If capex-to-depreciation stays at or above 1.5x in FY2030, reinvestment should remain elevated and cash available to shareholders would be lower.
The dated evidence does not establish a comparable return-on-capital trajectory. The added capacity must still demonstrate that revenue and profit can justify the investment.
The relevant hurdle is the 9.8508% WACC calculated as of and retrieved on 2026-09-09.
FY2025 operating cash flow was $7.15 billion, while free cash flow was $2.60 billion.
Stronger value requires lower reinvestment or better operating returns from the added capacity.
Capex fell from $5.07 billion in FY2023 to $4.82 billion in FY2024 and $4.55 billion in FY2025.
The decline makes normalization plausible, but it does not prove that the new assets are earning adequate returns.
| Revenue | $17,682,000,000 |
|---|---|
| Cost of revenue | $7,599,000,000 |
| Gross profit | $10,083,000,000 |
| Operating expenses | $4,060,000,000 |
| Operating income | $6,023,000,000 |
| Non-operating items and tax | -$1,022,000,000 |
| Net income | $5,001,000,000 |
| Total assets | $34,585,000,000 |
|---|---|
| Cash | $3,225,000,000 |
| Current assets | $13,750,000,000 |
| Total liabilities | $18,312,000,000 |
| Current liabilities | $3,159,000,000 |
| Shareholders’ equity | $16,273,000,000 |
| Net income | $5,001,000,000 |
|---|---|
| Operating inflow | $7,419,000,000 |
| Depreciation and amortization | $1,999,000,000 |
| Stock-based compensation | $419,000,000 |
| Operating cash flow | $7,153,000,000 |
| Operating outflow | $266,000,000 |
| Cash available | $10,353,000,000 |
| Beginning cash | $3,200,000,000 |
| Investing outflow | $1,439,000,000 |
| Financing outflow | $5,689,000,000 |
| Ending cash | $3,225,000,000 |
| Investing cash flow | -$1,439,000,000 |
| Financing cash flow | -$5,689,000,000 |
Source: SEC EDGAR · Filed 2026-02-06 · SEC EDGAR
| Revenue by operating segment | Revenue | Share | YoY |
|---|---|---|---|
| Analog | $14B | 79.2% | 15.2% |
| Embedded Processing | $2.7B | 15.3% | 6.5% |
| All Other Segments | $979M | 5.5% | 3.4% |
Point-in-time financial data used in the 2026-09-09 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016-12-31 | $13.4B | $6B | $3.6B | $4.6B | $4.1B | $531M | $955M | $252M | $2.1B | $1.6B | — | -$650M | -$3.8B | — | $1.2B | $3.5B | $3.6B | 36.3% | — | — | — |
| 2017-12-31 | $15B | $7.1B | $3.7B | $5.4B | $4.7B | $695M | $904M | $242M | $2.6B | $2.1B | — | -$1.1B | -$3.7B | $1.2B | $1.7B | $4.5B | $4.1B | 40.7% | — | — | — |
| 2018-12-31 | $15.8B | $7.8B | $5.6B | $7.2B | $6.1B | $1.1B | $954M | $232M | $5.1B | $2.6B | — | -$78M | -$6.3B | $1.7B | $2.4B | $4.2B | $5.1B | 42.5% | — | — | — |
| 2019-12-31 | $14.4B | $6.9B | $5B | $6.6B | $5.8B | $847M | $1.1B | $217M | $3B | $3B | — | -$1.9B | -$4.7B | $2.4B | $2.4B | $5.4B | $5.8B | 39.8% | — | — | — |
| 2020-12-31 | $14.5B | $7.2B | $5.6B | $6.1B | $5.5B | $649M | $992M | $224M | $2.6B | $3.4B | — | -$922M | -$4.5B | $2.4B | $3.1B | $6.6B | $6.8B | 40.8% | — | — | — |
| 2021-12-31 | $18.3B | $10.1B | $7.8B | $8.8B | $6.3B | $2.5B | $954M | $230M | $527M | $3.9B | — | -$4.1B | -$3.1B | $3.1B | $4.6B | $9.7B | $7.7B | 48.8% | — | 6.7% | — |
| 2022-12-31 | $20B | $11.2B | $8.7B | $8.7B | $5.9B | $2.8B | $979M | $289M | $3.6B | $4.3B | $994M | -$3.6B | -$6.7B | $4.6B | $3.1B | $9.1B | $8.7B | 50.6% | — | 8.9% | — |
| 2023-12-31 | $17.5B | $8.5B | $6.5B | $6.4B | $1.3B | $5.1B | $1.2B | $362M | $293M | $4.6B | $2.5B | -$4.4B | -$2.1B | $3.1B | $3B | $8.6B | $11.2B | 41.8% | — | 8.8% | — |
| 2024-12-31 | $15.6B | $7.5B | $4.8B | $6.3B | $1.5B | $4.8B | $1.6B | $387M | $929M | $4.8B | $2.4B | -$3.2B | -$2.9B | $3B | $3.2B | $7.6B | $13.6B | 34.9% | — | 9.3% | — |
| 2025-12-31 | $17.7B | $8.3B | $5B | $7.2B | $2.6B | $4.6B | $2B | $419M | $1.5B | $5B | $449M | -$1.4B | -$5.7B | $3.2B | $3.2B | $4.9B | $14B | 34.1% | — | 9.1% | — |
Texas Instruments Incorporated (TXN) trades at 26.1x forward earnings against a peer median of 16.6x. Its EV/EBITDA of 25.6x compares with a peer median of 21.1x. The comparison uses 4 peers: QUALCOMM Incorporated, Analog Devices Inc., Microchip Technology Incorporated and NXP Semiconductors N.V., as of 2026-09-08 to 2026-09-09.
Company capex declined from $5.07 billion in FY2023 to $4.55 billion in FY2025. Industry benchmarks were 4.4% of revenue and 1.27x depreciation as of 2026-09-01.5
FY2027 analyst forecasts average $24.93 billion of revenue, supporting a demand-led recovery if customers rebuild orders and Analog participates.
The FY2027 revenue range of $22.8 billion to $29.60 billion shows that recovery strength remains uncertain. A demand pause would leave added manufacturing capacity underused.
Analog produced $14.01 billion of FY2025 revenue. Its demand path therefore determines whether consolidated recovery absorbs the manufacturing cost base.6
No new allocation. The report-date price of $258.92 exceeds Potential value of $137.20, so new exposure is not supported.3
Treat customer loss, persistent sub-30% margin, and failed capital normalization as exit signals rather than temporary volatility.
The report-date price is above Potential value, despite a plausible earnings recovery.3
FY2025 free cash flow remained sensitive to elevated capital spending, limiting support for paying the report-date valuation.45
Reduce on recovery-driven strength rather than relying on the valuation premium to persist.3
Sell because the report-date price materially exceeds Fair value and Potential value.3
The FY2027 revenue forecast supports a recovery from FY2025, but Fair value remains below the report-date price. Upside still requires capital spending to produce stronger free cash flow.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
If WACC exceeds 11.8508%, distant recovery cash flows lose value before earnings can close the valuation gap.2
Excess spending would keep reinvestment high after the planned normalization period, delaying stronger cash generation and weakening dividend support per share.
Current:Approximately 2.28x in FY2025
Alert ifAbove 1.5x in FY2030
A higher hurdle rate would reduce the present worth of distant cash flows before operating improvement can close the valuation gap.
Current:9.8508% as of 2026-09-09
Alert ifAbove 11.8508% within 12 months
A customer cut would reduce sales immediately and leave factory costs spread across fewer units, lowering margins, earnings and cash.
Current:12% of FY2025 revenue
Alert ifA reported loss, material repricing, or in-sourcing event
Sustained Analog contraction, without offsetting growth elsewhere, would reduce consolidated sales and leave less revenue to absorb factory costs, lowering operating profit and free cash flow.
Current:$14.01 billion of FY2025 revenue
Alert ifBelow 0% for two consecutive fiscal years through FY2029
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and terminal value at WACC, then adjust for signed net debt per current share.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
Discount the explicit dividend path and its Gordon-growth terminal value at cost of equity.
Limitation: Terminal value is 71.2% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Solve for the growth rate that makes the model value equal the report-date share price.
This path raises profit and cash without requiring investors to pay a higher valuation for each dollar of earnings. Persistent heavy reinvestment would disconfirm it.
A weak margin would signal poor utilization or pricing.5
A purchase cut would hurt sales and utilization.6
| FY2035 |
|---|
| Revenue | $21.87B | $24.89B | $26.61B | $27.94B | $29.09B | $30.14B | $31.11B | $32.02B | $32.90B | $33.76B |
| Revenue growth | 23.7% | 13.8% | 6.9% | 5.0% | 4.1% | 3.6% | 3.2% | 2.9% | 2.8% | 2.6% |
| Operating margin | 34.2% | 35.4% | 36.2% | 36.9% | 36.9% | 37.0% | 37.0% | 37.1% | 37.1% | 37.2% |
| Operating income | $7.48B | $8.82B | $9.62B | $10.30B | $10.74B | $11.15B | $11.52B | $11.88B | $12.22B | $12.54B |
| Tax rate | 12.2% | 12.2% | 12.2% | 12.2% | 12.2% | 12.2% | 12.2% | 12.2% | 12.2% | 12.2% |
| NOPAT | $6.56B | $7.75B | $8.45B | $9.04B | $9.43B | $9.79B | $10.12B | $10.42B | $10.72B | $11.01B |
| Reinvestment | $2.53B | $2.24B | $1.63B | $872.24M | $0.00 | $276.80M | $572.12M | $884.42M | $1.21B | $1.56B |
| Reinvestment rate (of NOPAT) | 38.6% | 29.0% | 19.3% | 9.7% | 0.0% | 2.8% | 5.7% | 8.5% | 11.3% | 14.1% |
| Depreciation and amortization | $2.47B | $2.81B | $3.01B | $3.16B | $3.29B | $3.41B | $3.52B | $3.62B | $3.72B | $3.82B |
| Free cash flow to firm | $4.03B | $5.50B | $6.82B | $8.17B | $9.43B | $9.51B | $9.54B | $9.54B | $9.51B | $9.45B |
| Analog revenue | $17.32B | $19.72B | $21.08B | $22.13B | $23.04B | $23.88B | $24.64B | $25.36B | $26.06B | $26.74B |
| Embedded Processing revenue | $3.34B | $3.80B | $4.06B | $4.26B | $4.44B | $4.60B | $4.74B | $4.88B | $5.02B | $5.15B |
| All Other Segments revenue | $1.21B | $1.38B | $1.47B | $1.55B | $1.61B | $1.67B | $1.72B | $1.77B | $1.82B | $1.87B |
| Terminal growth | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% |
| Margin |
|---|
| TXN | Texas Instruments Incorporated | $236.5B | 26.1x | 12.2x | 25.6x | 35.2% | — |
| QCOM | QUALCOMM Incorporated | 17.0x | 4.2x | 15.8x | 33.8% | 18.5% | |
| ADI | Analog Devices Inc. | 22.2x | 12.7x | 26.4x | 12.2% | 39.5% | |
| MCHP | Microchip Technology Incorporated | 16.1x | 7.8x | 29.9x | 7.2% | 24.0% | |
| NXPI | NXP Semiconductors N.V. | 12.4x | 4.3x | 12.7x | 27.9% | 30.4% |
