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Executive TL;DR
Texas Instruments (TXN)’s Q3 2026 revenue reached $6.06B (+28% year over year) and EPS reached $2.62 (+77%), with Q4 guided to $5.80B to $6.30B in revenue and $2.45 to $2.79 in EPS.
Gross margin hit 64%, and incremental gross margin ran near 89% year over year, so each extra revenue dollar is reaching profit at a very high rate.
Industrial revenue set its first new peak in four years, data center grew about 95% to roughly 13% of sales, and automotive grew in the mid-teens.
Trailing free cash flow reached $8.4B (40.6% of revenue) as capex fell to about $2.6B, and the quarterly dividend rose 7% to $1.52.
The $7.5B Silicon Labs acquisition is expected to close in the first half of 2027, and Moody’s moved its outlook on TI to negative while affirming the Aa3 rating.
Recent Wall Street targets run from $250 to $385, so the debate now centers on how durable the data center and industrial upswing proves to be.
Here’s what you get in this analysis:
Texas Instruments (TXN) Company Overview
Company Profile at a Glance
Business Model and Competitive Advantages
Revenue Mix and End Markets
Investment Thesis
Texas Instruments Revenue & Financial Analysis
Q3 2026 Results Against Expectations
Margins and Operating Leverage
Pricing, Lead Times and Supply Tightness
Segment Performance
Cash Flow, Capex and the CHIPS Act
Balance Sheet, Debt and Inventory
Growth Engines Deep-Dive
Industrial: A New Peak After Four Years
Automotive: Customers Short on Inventory
Data Center: From 9% to 13% of Revenue
Embedded Processing and the Silicon Labs Deal
Manufacturing Strategy: The 300mm Advantage
Capital Allocation and Shareholder Returns
Industry Context and Peer Check
Scenario Modeling: 2027 Earnings Power
Key Risks
What to Watch Through 2027
Bottom Line for Investors
Latest Analyst Price Targets
Official Sources & Data
Disclaimer: This analysis is for informational & educational purposes only and should not be construed as investment advice. Investors should conduct their own due diligence before making investment decisions. Past performance does not guarantee future results.
Texas Instruments (TXN) added $1.31 billion of revenue in Q3 2026 compared with a year earlier and turned $1.21 billion of that increase into operating profit. That works out to a 92% incremental operating margin, or about 86% after removing the $85 million restructuring charge booked in Q3 2025.
Management then guided Q4 revenue flat with Q3 at the midpoint, in a quarter that usually runs seasonally lower. Industrial revenue reached a new peak after four years, data center nearly doubled, and trailing capital spending fell 46% from a year earlier.
This deep-dive fundamental analysis breakdowns earnings power, cash generation, the 300mm fab build, the Silicon Labs math, a risk register, 2027 scenarios & more.
Let’s begin.
Texas Instruments (TXN) Company Overview
Company Profile at a Glance
Texas Instruments is a Dallas-based global semiconductor company that designs, manufactures and sells analog and embedded processing chips. Analog chips handle real-world signals and power, while embedded processors run the control logic inside a system.
The company generated $17.68 billion of revenue in 2025. Analog contributed $14.01 billion, Embedded Processing $2.70 billion and Other $979 million.
Ticker: TXN (Nasdaq)
Headquarters: Dallas, Texas
Chairman, President and CEO: Haviv Ilan
CFO: Julie Knecht (effective August 1, 2026)
2025 revenue: $17.68 billion
Trailing 12-month revenue through Q3 2026: $20.77 billion
2025 segment mix: Analog 79%, Embedded Processing 15%, Other 6%
2025 end markets: Industrial 33%, Automotive 33%, Personal electronics 21%, Data center 9%, Communications equipment 3%
Customer base: about 200,000 customers beyond the fewer than 2,000 that TI sells to directly
Quarterly dividend: $1.52 per share, 23 consecutive years of increasesBusiness Model and Competitive Advantages
TI runs the company around four competitive advantages: manufacturing and technology, a broad product portfolio, reach of its market channels, and diverse, long-lived positions. Each one reinforces the others.
Manufacturing sits at the base. TI states that more than 90% of its wafers and assembly will be built internally, on process technologies between 28nm and 130nm tuned for analog and embedded products.
Channel reach comes from a direct sales team that calls on fewer than 2,000 customers and from TI.com, which serves roughly 200,000 more.
Long-lived positions matter because many industrial designs run for decades. A socket won today can keep paying for years.
Advantage 1: Manufacturing and technology (internal 300mm capacity, 28nm to 130nm processes)
Advantage 2: Broad portfolio of general-purpose and application-specific analog and embedded chips
Advantage 3: Reach of market channels, including a direct sales team and TI.com
Advantage 4: Diverse and long-lived positions (less single-point dependency, longer return on investment)
Stated objective: maximize long-term growth of free cash flow per share
Revenue Mix and End Markets
Industrial, automotive and data center made up about 75% of 2025 revenue, compared with about 43% in 2013. Industrial and automotive each contributed $5.8 billion (33% apiece), data center $1.5 billion (9%), personal electronics $3.7 billion (21%) and communications equipment about $500 million (3%).
TI created the data center category in early 2026 by moving optical communications out of communications equipment and rack power delivery out of industrial. That reclassification put data center at 9% of 2025 revenue.
Q3 2026 shows how fast the mix is moving.
Data center reached roughly 13% of revenue, while personal electronics, the weakest category, was about flat year over year.
Industrial: more than 40% YoY, about 10% sequential (new revenue peak after four years)
Automotive: mid-teens YoY, about 10% sequential
Data center: about 95% YoY, about 20% sequential, roughly 13% of Q3 revenue
Personal electronics: about flat YoY, upper single digits sequential
Communications equipment: up both YoY and sequentially
Investment Thesis
Cyclical recovery with richer content. Systems designed four years after the COVID peak carry more semiconductor content, so this recovery lands above the prior revenue peak in the industrial market.
Data center as a second growth leg. Rack power, cooling, telemetry and networking all use TI parts, and the company now sells about 10,000 generic part numbers into the market.
Capex trough turns earnings into cash. After years of heavy spending on 300mm fabs, capex is running at $2B to $3B in 2026 against $4.55B in 2025.
Supply as a selling point. Analog capacity outside China and Taiwan saw little addition over four years, and some customers are asking TI to commit capacity into 2027 and beyond.
Thesis 1: Cyclical recovery with higher content per system
Thesis 2: Data center as a second secular growth leg
Thesis 3: Capex trough converts earnings into free cash flow
Thesis 4: Supply position that customers are starting to pay for
Main counterweights: inventory days, higher debt after Silicon Labs, China exposure
Texas Instruments Revenue & Financial Analysis
Q3 2026 Results Against Expectations
TI reported revenue of $6.055 billion and EPS of $2.62, which beat consensus estimates of roughly $5.93 billion and $2.40. EPS carried a 1-cent reduction from discrete tax items that was not in guidance.
The Q4 outlook of $5.80 billion to $6.30 billion implies a flat quarter at the midpoint. Bernstein’s Stacy Rasgon pointed out on the call that Q4 normally falls by mid-to-high single digits, which makes this one of the stronger Q4 guides in years.
Ilan credited data center, industrial and automotive for the above-seasonal outlook. Data center has little seasonality, and industrial demand is running strongest in aerospace and defense, energy infrastructure, test and measurement and robotics.
At the guidance midpoint, 2026 revenue lands near $22.4 billion (+27% versus $17.68 billion in 2025) and EPS near $9.06, versus $5.45 a year earlier. The full guidance range implies revenue of $22.1 billion to $22.6 billion and EPS of $8.89 to $9.23.
Q3 2026 revenue: $6,055 million (Q3 2025: $4,742 million)
Q3 2026 operating profit: $2,874 million (Q3 2025: $1,663 million)
Q3 2026 net income: $2,425 million (Q3 2025: $1,364 million)
Q3 2026 diluted EPS: $2.62 (Q3 2025: $1.48)
Q4 2026 guidance: revenue $5.80 billion to $6.30 billion, EPS $2.45 to $2.79
2026 quarterly revenue path: Q1 $4.83 billion, Q2 $5.46 billion, Q3 $6.06 billion
YoY revenue growth path: Q1 +19%, Q2 +23%, Q3 +28%, Q4 guidance midpoint about +37%
Implied 2026 revenue at guidance midpoint: about $22.4 billion
Implied 2026 EPS at guidance midpoint: about $9.06 (2025: $5.45)Growth has