PMIC Analog Design Engineer

Texas Instruments generates $6.06 billion in Q3 revenue, up 28%

Texas Instruments (TI) reported third quarter revenue of $6.06 billion, up 28% from a year earlier and 11% from the previous quarter. Net income rose 78% to $2.43 billion, and earnings per share were $2.62. Chief executive officer Haviv Ilan cited broad growth in industrial, automotive, and data center markets. Cash flow from operations over the trailing 12 months was $9.9 billion, and free cash flow was $8.4 billion. TI invested $4.0 billion in research and development and selling, general and administrative costs, spent $2.6 billion on capital expenditures, and returned $5.8 billion to shareholders. For the fourth quarter, TI expects revenue of $5.80 billion to $6.30 billion and earnings per share of $2.45 to $2.79.

Texas Instruments (TXN) sees profits recover, but is the stock still expensive? Texas Instruments' margins are improving and its factory spending is finally easing, but at roughly 28x forward earnings, the stock is betting industrial demand stays strong enough to keep those gains from fading once the first rebound wears off. Published October 21, 2026 at 10:10 am EDT - Updated October 21, 2026 at 10:42 am EDT Texas Instruments Incorporated (NASDAQ:TXN) is gaining from recovering chip demand just as its heavy factory spending starts to ease. The stock is at 41.43 times trailing earnings and 27.55 times forward earnings. Now the question is whether the company's new capacity can help lasting growth or simply boost another industry upswing. Recovering demand is reaching the bottom line. Texas Instruments Incorporated (NASDAQ:TXN)'s analog chips manage power and handle electrical signals in equipment ranging from cars to factory machinery. AI infrastructure needs these components too. So TI now has a second source of demand alongside its industrial recovery. On its July earnings call, management said second-quarter industrial revenue grew around 30% from a year earlier, while data-center revenue doubled. A rival shows a similar demand improvement in Analog Devices, Inc. (ADI) Anticipates Q3 Revenue Above Estimates. TI's second-quarter revenue rose 23% to $5.46 billion, and operating profit increased 48% to $2.31 billion. Its operating margin, the share of revenue it keeps as profit before interest and taxes, reached 42.3%, up from 35.1% a year earlier. More sales now turn into much more profit. Owning its factories helps explain that jump since many manufacturing costs stay fixed even when orders slow. When TI produces more chips, those costs spread across more sales, and profitability improves. The same math works in reverse when demand weakens. So owning factories does not shield TI from the chip cycle. Lower factory spending strengthens the cash story. Texas Instruments Incorporated (NASDAQ:TXN) expects to spend $2 billion to $3 billion on factories and equipment in 2026 as its major capacity expansion nears completion. With less cash going into construction, TI can put more toward dividends and future investment. The improvement already shows up in the numbers; Free cash flow reached $6.53 billion in the 12 months through June 2026, up from $1.76 billion a year earlier. The firm calculates it as operating cash left after capital spending, plus direct CHIPS Act incentive receipts. So government backup adds to the recovery, alongside stronger operations and lower spending. Stronger cash generation also has competing uses. TI plans to fund its $7.5 billion Silicon Labs acquisition with cash and debt. Better cash flow does not mean every extra dollar will reach shareholders. The lower forward P/E already Anticipates progress. Trailing PE compares the price with past earnings, while forward PE uses forecast earnings. TI's lower forward multiple shows that investors expect higher profits. At 27.55 times, they pay about $28 for every $1 of annual earnings analysts expect. Recovering orders and better factory utilization give those expectations a business reason. In July, management guided third-quarter earnings per share to $2.23 to $2.57, above the second quarter's $2.14. That outlook helps the recovery argument, though it is separate from analyst-based forward multiple. The historical comparison is less clear since trailing PE fell from 50.95 on June 30, 2026, to 41.43. The share price dropped over that stretch, and July's results gave TI a stronger trailing earnings base. Still, the multiple sits above the 31.60 it carried on December 31, 2025. TI has become cheaper than it was in June, but it has not returned to its year-end valuation. The technology-sector median trailing reported P/E is 34.64. Therefore, investors pay roughly $41 for each $1 of TI's past earnings, against about $35 at the sector median. TI's lower-cost manufacturing can support a premium, since larger wafers cut chip-production costs. But a broad sector benchmark does not give a precise fair value, and the cost advantage matters most when customers keep factories busy. Market sentiment. At the end of Q2 2026, 111 hedge funds held Texas Instruments Incorporated (NASDAQ:TXN), up from 71 in Q1. Their stakes totaled $6.85 billion, up from $3.91 billion. Participation grew, but the tracked sample changed, and higher position values alone do not prove net buying. The recovery supports holding, but the price still requires more. Texas Instruments Incorporated (NASDAQ:TXN)'s improving margins and cash generation give its valuation a credible base. The evidence supports holding existing shares. Even though at roughly 28 times expected earnings, the stock looks less appealing for a new purchase in a cyclical business. The premium needs industrial demand to stay strong enough to keep factories productive after the first rebound. Constant margin gains and cash growth beyond government aid would solidify the case for buying. Renewed order weakness would hurt both profits and the price investors can justify paying. While we acknowledge the risk and potential of TXN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TXN and that has 10,000% upside potential, check out our report about this cheapest AI stock.