TXN — Texas Instruments Incorporated

As of 2026-08-27, the tape is mixed: Q2 2026 EPS of $2.14 and Q3 revenue guidance of $5.65–6.15B were both strong, yet the stock pulled back roughly 19% from the June peak in a sell-the-news/valuation reset. The analyst consensus is still positive — 31 buy ratings versus 28 holds and 6 sells, with an average target near $325 — but the forward P/E is rich and RSI at 43.2 with price below the 20- and 50-day SMAs shows the market is not aggressively bidding the stock higher right now.

Revenue bottomed around $3.66B in Q1 2024 and has climbed almost every quarter since, reaching $5.46B in Q2 2026, up 23% YoY. Q2 2026 EPS of $2.14 was up ~52% from $1.41 a year earlier, and operating margin expanded to ~42.3% from ~35.1% in Q2 2025. Capex also fell sharply to $514M in Q2 2026 from $1.305B in Q2 2025, driving quarterly free cash flow from $555M to $2.19B. This is a genuine cyclical and operational inflection, not a one-quarter blip.

As of 2026-08-27, valuation is expensive. Trailing P/E is 40.3x and P/S is 12.5x versus 5-year averages of 26.3x and 9.15x respectively, and PEG is 2.04x. Using the next-fiscal-year consensus EPS of $8.51, the forward P/E is roughly 31x. That is a premium multiple for a cyclical analog business, though it is more defensible if the recovery, margin expansion, and post-capex FCF step-up prove durable.

At $266.54, the market is paying roughly 31x forward EPS of $8.51, so the cyclical recovery is mostly in the price. If the stock merely reverted to a 30x forward multiple, fair value would be around $255. Upside from here depends on EPS beating $8.51 and/or the market continuing to pay a premium multiple. TXN is not obviously underpricing the turnaround — it is pricing it, with modest room for outperformance.

As of 2026-08-27, RSI was 43.2, the price was 2.4% below its 20-day SMA, 7.1% below its 50-day SMA, and 12.7% above its 200-day SMA. That is an intermediate pullback within a longer-term uptrend, not an oversold capitulation. The technical read favors waiting for stabilization around the 50-day or 200-day area rather than treating the current dip as a confirmed entry point.

• Rising Treasury yields and macro jitters are pressuring high-multiple technology and semiconductor names.
• Money is rotating within semis from AI infrastructure darlings toward analog/industrial plays as those end-markets recover.
• Industrial and automotive demand are bottoming and turning up, directly supporting TXN's largest markets.
• Data center power demand is expanding, and TXN's power-management exposure is a structural tailwind.
• The multi-year 300mm fab buildout is winding down, which is reducing the cash-flow drag from capex.

• Q3 2026 earnings expected in late October 2026 — whether the $5.65–6.15B guidance is met and whether industrial/auto momentum broadens.
• Continued capex normalization driving free cash flow higher, potentially leading to faster dividend increases or a more aggressive buyback pace.
• Further data-center/power-management content gains as AI infrastructure power needs keep growing.
• A continued cyclical recovery in industrial and automotive markets flowing through to revenue and margins.

• Valuation risk: a forward P/E near 31x leaves little margin for error if estimates slip.
• Semiconductor cycle risk: if the industrial/auto recovery stalls or customers re-build excess inventory, the earnings recovery could pause.
• Execution risk on the large 300mm capex program: overcapacity or higher-than-expected costs could hit returns.
• Geopolitical and export-control risk, especially related to China and broader trade restrictions.
• Macro/rate risk: higher-for-longer bond yields tend to compress high-multiple tech valuations regardless of fundamentals.
• CFO transition adds modest leadership/transition risk at a key operational pivot point.

TXN is a high-quality analog semiconductor leader in a broad cyclical recovery, with falling capex unlocking meaningful free cash flow and a durable, growing dividend. At $266.54 the risk/reward is acceptable but not compelling: the valuation already reflects much of the good news, so I lean cautiously bullish on the business and would prefer buying on further weakness or a confirmed technical stabilization. This is analysis, not personalized investment advice.

Applied a 32x justified forward P/E to consensus next-fiscal-year EPS of $8.51 — a slight premium to TXN's 5-year average trailing multiple to reflect the durable cyclical recovery, margin strength, and post-capex FCF inflection, but below the sell-side target multiple — yielding $272.35. This sits slightly above the current price but well below the $325 consensus target, because the stock is already priced for much of the recovery.