Texas Instrument’s key “moat” is its unmatched structural advantage in advanced internal manufacturing. While rival chipmakers rely heavily on third-party foundries, this one manufactures roughly 80% of its products internally even while rapidly expanding its proprietary 300-millimeter wafer fabrication capabilities across its Texas and Utah facilities. This gives the company defensible profit margins that can withstand macroeconomic pricing cycles while ensuring an absolutely secure, highly liquid domestic supply chain for multi-national corporate buyers.
The company is also riding a highly lucrative double-tailed wave of global electrification and AI system integration. Every advanced electric vehicle, smart factory robot, and AI server cluster requires hundreds of specialized analog chips to regulate power, read sensors, and translate real-world physical dynamics into digital data.
The stock trades at 39.0 times the company’s forward earnings forecast. That’s high, but the company is uniquely positioned in a powerful semiconductor cycle.
TEXAS INSTRUMENTS INC. (Nasdaq symbol TXN; www.ti.com) has long specialized in analog chips to convert inputs like touch and sound to electronic signals that computers can understand. And now, those chips also play a key role in managing electrical power levels in the datacentres needed to run power-intensive AI.
Texas Instruments is also benefitting from upgrades to its manufacturing plants, which have cut production times and costs.
The company recently agreed to acquire Silicon Laboratories Inc. (Nasdaq symbol SLAB), which designs chips that wirelessly connect devices to the Internet (typically called the Internet of Things).
The company will pay $7.5 billion in cash. If Silicon Labs shareholders and regulators approve, the company expects to complete the purchase in the first half of 2027.
The addition of Silicon Labs’ technology will let Texas Instruments offer a wider range of products to its customers. As well, transferring Silicon Labs’ production from overseas chipmaking plants to Texas Instruments’ own facilities will help cut $450 million from its annual costs within three years.
[ofie_ad]
Texas Instrument’s sales and earnings surge bodes well for its prospects
Texas Instruments is seeing strong demand for its products from the builders of new datacentres to run artificial intelligence (AI) applications.
In the three months ended March 31, 2026, Texas Instruments’ revenue increased by 18.6%, to $4.83 billion from $4.07 billion a year earlier. Revenue rose due to broad-based acceleration in demand across industrial and data centre markets, coupled with an improving overall unit demand in the semiconductor cycle.
The company finished the first quarter with net income of $1.55 billion, or $1.68 a share, up 31.0% from $1.18 billion, or $1.28. Earnings rose due to the strong sales growth, as well as cost cutting and more disciplined manufacturing efficiency.
Meantime, Texas Instruments is up a whopping 75% since the start of 2026 on strong demand for its computer chips used to run new AI datacentres.
Earnings will probably rise 40% in 2026 to $7.79 a share, and the stock trades at 39.0 times that forecast. That’s a high multiple, but still acceptable, considering the company’s leading market share and high research costs (12% of revenue).
Texas Instruments last raised your quarterly dividend with the November 2025 payment. Investors now receive $1.42 a share, up 4.4% from $1.36. The new annual rate of $5.68 yields 1.9%.
Recommendation in Wall Street Stock Forecaster: Texas Instruments Inc. is a buy.
