The most common mistake in any Texas Instruments TXN price prediction is treating the stock as a broken analog name finally staging a recovery. It isn\u2019t broken, and the recovery is already in the price. TXN trades at $276.15 as of 6 August 2026, up 56% year-to-date and 90% off its April 2025 low of $145.61, yet still 16.9% below the record close of $332.28 set on 22 June 2026 (Nasdaq daily closes). The company just posted revenue up 23% and EPS up 52%, and the shares fell anyway. That gap between operational excellence and market indifference is the entire story. The street\u2019s twelve-month range runs from $405 at the top to $225 at the bottom \u2014 a 65-point spread on the same set of facts.
\nThe insight almost no one is pricing: consensus expects Texas Instruments to earn $10.40 per share in 2027. The company earned $9.41 per share in 2022. That is a 10.5% increase in earnings power across five full years \u2014 a compound annual growth rate of roughly 2.0% \u2014 during which the stock has roughly doubled. Every dollar of TXN\u2019s re-rating since 2022 has come from multiple expansion, not from earnings growth. The bull case and the bear case are not arguments about whether the analog cycle is recovering. Both sides agree it is. They are arguments about what a 2%-EPS-CAGR industrial compounder is worth at 32 times earnings.
\nTXN daily closes since January 2025 with the three twelve-month scenarios. Source: Nasdaq closing prices; analyst target range via StockAnalysis consensus, August 2026.
\nKey facts: Texas Instruments at a glance<\/p>\n
Share price $276.15, market capitalisation $252.2bn, dividend yield 2.06% \u2014 Nasdaq, 6 August 2026
\nQ2 2026 revenue $5.46bn, up 23% year-over-year; GAAP EPS $2.14, up 52% \u2014 TI Q2 2026 results, 21 July 2026
\nGross margin 61% of revenue, up 340 basis points sequentially; operating profit $2.31bn, or 42% of revenue \u2014 TI Q2 2026 results
\nTrailing-twelve-month free cash flow $6.5bn, up from $1.8bn a year earlier \u2014 including $1.6bn of CHIPS Act incentives \u2014 CFO Rafael Lizardi, Q2 2026 earnings call
\n2026 capital expenditure guided to $2\u20133bn, against a 2023 peak of $5.07bn \u2014 TI guidance; Nasdaq annual cash flow statements
\nConsensus 2026 EPS $8.46, 2027 EPS $10.40; FY2022 actual EPS was $9.41 \u2014 StockAnalysis consensus; TI FY2022 results
\nAnalyst range $225 to $405, average $324.45 across 36 analysts \u2014 StockAnalysis, August 2026<\/p>\n
What actually happened in Q2 2026 \u2014 and why the stock fell
\nTexas Instruments reported second-quarter revenue of $5.46bn against a consensus of roughly $5.24bn, and adjusted EPS of $2.09 against $1.92 expected (StockTitan). On a GAAP basis, EPS came in at $2.14, up 52% year-over-year, helped by a $0.05 discrete tax benefit above guidance. Gross profit reached $3.4bn, or 61% of revenue, with gross margin expanding 340 basis points sequentially. Operating profit of $2.31bn represented 42% of revenue, up 48% on the year-ago quarter.
\nThe breadth was the impressive part. Analog revenue rose 26% year-over-year and Embedded Processing rose 16%. By end market, industrial was up 30%, automotive grew in the mid-teens and accelerating, and data centre revenue doubled. Inventory fell to 196 days, down 13 days sequentially \u2014 the cleanest channel position TI has shown since the 2023 downturn began.
\nThink of an analog semiconductor business the way you would a toll road rather than a technology platform. TI does not win by having the fastest chip; it wins by owning the physical capacity to supply tens of thousands of customers with parts that cost cents and that no one will re-qualify to save a rounding error. Once the road is built, traffic is nearly pure margin. The catch is that building the road takes four years and several billion dollars, and you build it before you know how many cars are coming.
\nSo why did the stock drop 3.06% in after-hours trade despite beating on both lines? Because guidance was merely fine rather than spectacular. Q3 revenue was guided to $5.65bn\u2013$6.15bn with EPS of $2.23\u2013$2.57 \u2014 a solid step up, but at a midpoint of $5.90bn it implies sequential growth that decelerates from what Q2 delivered. Investors who had bid the stock to $332 in June were underwriting acceleration, not normalisation. This is the same pattern that hit Apple, which beat by every measure and still fell 6%, and it has become the defining market reaction of this earnings season.
\nOn the call, CEO Haviv Ilan was unambiguous about the demand backdrop: \u201cI think we are in the start of a cycle that is very, very broad.\u201d He also confirmed TI has begun raising prices \u2014 \u201cWe have started executing price increases, yes\u201d \u2014 while management characterised pricing\u2019s contribution to Q3 growth as almost insignificant. Both statements are true, and the tension between them is exactly what the market is trying to value (Q2 2026 earnings call transcript).
\nThe capex cliff: the strongest argument for $405
\nThe bull case is not really about the demand cycle. It is about arithmetic on the cost side, and it is more compelling than most of the commentary suggests.
\nTexas Instruments spent the last four years building fabs at an extraordinary rate. Capital expenditure ran $2.80bn in 2022, $5.07bn in 2023, $4.82bn in 2024 and $4.55bn in 2025 (Nasdaq annual cash flow statements). Management has guided 2026 capex to $2\u20133bn, with CFO Rafael Lizardi noting it \u201ccould be on the higher end.\u201d Even at the top of that range, capex falls by more than 40% from the 2023 peak.
\nNow combine that with the revenue line, which is the synthesis the sell-side notes tend to skip. In 2023, TI spent $5.07bn of capex against $17.52bn of revenue \u2014 a capital intensity of 28.9%. On consensus 2026 revenue of $21.90bn and capex of $2.5bn, capital intensity falls to roughly 11.4%. TI is about to run a business with a quarter more revenue at closer to a third of the capital intensity. That is the mechanism converting a 23% revenue increase into a 271% year-over-year jump in quarterly free cash flow.
\nThe physical asset behind this is real and already producing. TI has committed more than $60bn across seven US fabs, with up to $40bn concentrated at the Sherman, Texas mega-site across SM1 through SM4. SM1 has begun production, and 300mm wafers carry roughly 40% lower chip-level fabrication cost than the 200mm capacity they replace (Tom\u2019s Hardware). Ilan\u2019s framing on the call was that TI is \u201cuniquely prepared versus the competition\u201d because \u201cwe have done the hard work ahead of time, and we have capacity to build into.\u201d
\nIf you believe the cycle runs three years and TI holds 61%-plus gross margins while capex stays near $2.5bn, the $405 target from Arete\u2019s Alexi de Unger \u2014 the highest on the street \u2014 is defensible. At $405 against 2027 consensus EPS of $10.40, you are paying 38.9 times. That is rich, but it is the multiple the market has repeatedly awarded analog franchises at the point where operating leverage becomes visible in reported cash flow rather than promised in slide decks.
\nThe valuation problem: why $225 is not a panic number
\nHere is where the bear case earns its hearing, and it does not require the cycle to roll over.
\nAt $276.15, TXN trades at 32.6 times 2026 consensus EPS of $8.46 and 26.6 times 2027 consensus of $10.40. Those are not disaster multiples. The problem is what sits underneath them. Texas Instruments earned $9.41 per share in 2022 on revenue of $20.03bn (TI FY2022 results). Consensus does not have the company beating that 2022 EPS figure until 2027, when it expects $10.40. Five years, 10.5% cumulative EPS growth, roughly 2.0% annualised \u2014 and across that same window the share price has approximately doubled.
\nThe second issue is the quality of the cash flow being capitalised. Trailing-twelve-month free cash flow of $6.5bn includes $1.6bn of CHIPS Act incentives, which Lizardi disclosed explicitly. Strip those out and underlying TTM free cash flow is roughly $4.9bn. Against approximately 913m shares and an annualised dividend of $5.68, TI\u2019s dividend commitment runs at about $5.19bn per year. On a trailing basis, therefore, the dividend has exceeded underlying free cash flow, with government incentives closing the gap.
\nThat comparison deserves an honest caveat, because it is a lookback rather than a forecast. Q2 free cash flow alone was $2.74bn; annualise anything close to that run-rate and the dividend is covered comfortably, with room to spare. The bear point is not that the dividend is at risk \u2014 it plainly is not. The point is narrower and harder to dismiss: investors paying 32 times earnings are capitalising a trailing cash flow stream that was materially subsidised, and the coverage they are relying on has existed for one quarter, not one cycle.<\/p>\n
Scenario
\nTarget
\nChange from $276.15
\nImplied 2027 P\/E
\nWhat has to be true<\/p>\n
Bull
\n$405
\n+46.7%
\n38.9x
\nBroad cycle runs into 2028; capex holds near $2.5bn; pricing sticks; margins clear 65%<\/p>\n
Consensus
\n$324.45
\n+17.5%
\n31.2x
\nCycle normalises; TI hits 2027 EPS of $10.40; multiple broadly holds<\/p>\n
Bear
\n$225
\n\u221218.5%
\n21.6x
\nNo earnings collapse needed \u2014 only a de-rating toward historical analog multiples<\/p>\n
Note what the bear column does not require. At $225, TXN would still trade at 26.6 times 2026 earnings and 21.6 times 2027 earnings. The low end of the street range is not modelling a recession, a share-loss event or a dividend cut. It is modelling multiple compression alone. That is why the $225 figure matters more than a typical bear case: it is what happens if TI executes exactly as guided and investors simply decide that 2% five-year EPS growth does not deserve a 30-plus multiple. Readers who followed our AMD bull and bear breakdown will recognise the structure \u2014 in semiconductors right now, the multiple is doing far more work than the earnings.
\nThe competitive and macro cross-currents
\nThree external forces will determine which scenario lands.
\nInput cost inflation. The memory price surge that has been squeezing the rest of the semiconductor complex is a genuine risk to the analog cost base, though an indirect one. When Qualcomm\u2019s profit outlook was hit by memory inflation, it signalled that bill-of-materials pressure is propagating into companies that do not manufacture memory at all. TI\u2019s vertical integration and in-house 300mm capacity insulate it better than most, and this is a meaningful structural advantage \u2014 but insulation is not immunity if customers respond by squeezing suppliers on price.
\nCyclical positioning. Industrial and automotive are the two end markets furthest from the AI capex boom, which cuts both ways. TI missed the violent AI-driven re-rating that lifted GPU names, but it also carries far less exposure if that trade unwinds. The AI chip selloff that hit SK Hynix and AMD barely touched analog. Meanwhile the reverse rotation is now visible: the AI trade has been leaking into boring industrial names, and TI\u2019s data-centre revenue doubling year-over-year suggests it is capturing AI-adjacent power-management demand without carrying AI-adjacent valuation risk in its core business.
\nPolicy dependency. The $1.6bn of CHIPS Act incentives inside trailing free cash flow is a reminder that a portion of TI\u2019s reported cash generation is a function of industrial policy rather than commercial performance. Those incentives are tied to capital deployment that is now winding down. As capex normalises to $2\u20133bn, the incentive contribution mechanically shrinks with it. This is not a scandal and it is fully disclosed, but any model that extrapolates $6.5bn of trailing free cash flow forward without adjusting for it is overstating the run-rate. The contrast with Intel\u2019s far more troubled relationship with US chip subsidies is instructive: TI took the money and built fabs that are now producing, which is precisely how the policy was meant to work.
\nWhat happens next: three predictions
\n1. Q3 lands in the upper half of guidance, and it will not be enough. Given 196 inventory days trending down, industrial up 30% and pricing increases beginning to flow through, TI should print toward the upper end of the $5.65bn\u2013$6.15bn range \u2014 call it $5.95bn\u2013$6.10bn. But with the stock at 32 times earnings, an in-line-to-good quarter is already priced. Expect the same muted or negative reaction to a beat that followed Q2 unless Q4 guidance implies acceleration rather than continuation.
\n2. Gross margin is the single variable that decides the year. TI added 340 basis points sequentially to reach 61%. The bull case at $405 effectively requires margins pushing toward the mid-60s as Sherman\u2019s 300mm output displaces higher-cost 200mm capacity. Watch this number above all others \u2014 it is where the fab investment either shows up or does not. If TI clears 64% by Q4 2026, the $405 case becomes live. If margins stall near 61% while revenue grows, the market will conclude the capex was defensive rather than accretive, and the $225 de-rating becomes the path of least resistance.
\n3. The CFO transition is a real, underappreciated variable. Julie Knecht, previously Chief Accounting Officer, took over as CFO on 1 August 2026, succeeding Rafael Lizardi. Lizardi was the architect of TI\u2019s free-cash-flow-per-share framework and one of the most consistent capital-allocation communicators in the sector. Any change in how the capex trajectory, the buyback cadence or the CHIPS incentive contribution is framed on the Q3 call will move the stock independently of the underlying results.
\nOur base case sits closer to consensus than to either extreme: TXN in the $300\u2013$330 range over twelve months, with the outcome hinging on gross margin rather than revenue. The path to $405 exists but requires the market to award an expanding multiple to a company whose five-year earnings growth is 2% annually. The path to $225 requires nothing to go wrong operationally at all \u2014 only for investors to notice what they are paying. For a stock that has already delivered a 90% move off its 2025 low, the asymmetry no longer obviously favours the bulls. Our SanDisk bull-versus-bear analysis reached a structurally similar conclusion about a very different chip business.
\nFrequently asked questions
\nWhat is the Texas Instruments TXN price prediction for the next 12 months?
\nThe analyst range runs from $225 to $405, with an average target of $324.45 across 36 analysts as of August 2026, implying roughly 17% upside from $276.15. Nasdaq\u2019s consensus screen shows a somewhat higher $340 one-year target. Our own base case is $300\u2013$330, with gross margin progression the decisive variable rather than revenue growth.
\nWhy did TXN stock fall after beating Q2 2026 earnings?
\nTexas Instruments beat on revenue ($5.46bn versus $5.24bn expected) and EPS ($2.09 adjusted versus $1.92), but shares fell 3.06% after hours. The Q3 guidance midpoint of $5.90bn implied decelerating sequential growth, and after a 56% year-to-date run investors were positioned for acceleration. The beat was operational; the disappointment was in the trajectory.
\nIs TXN stock overvalued at $276?
\nIt depends entirely on the growth rate you assign. At 32.6 times 2026 consensus EPS of $8.46, TXN is expensive against its own history. The sharpest bear argument is that consensus 2027 EPS of $10.40 is only 10.5% above the $9.41 TI actually earned in 2022 \u2014 roughly 2% annual growth over five years, which does not conventionally support a 30-plus multiple.
\nHow safe is the Texas Instruments dividend?
\nThe dividend is secure in the near term. TI pays $5.68 annualised, yielding 2.06%, costing roughly $5.19bn per year. Trailing free cash flow of $6.5bn covers it, though $1.6bn of that came from CHIPS Act incentives. More importantly, Q2 free cash flow alone was $2.74bn \u2014 an annualised run-rate that covers the dividend comfortably without any policy support.
\nWhat is the bull case for TXN reaching $405?
\nCapital expenditure falls from a $5.07bn peak in 2023 to a guided $2\u20133bn in 2026 just as revenue grows roughly 24% to $21.90bn, cutting capital intensity from 28.9% to about 11.4%. If Sherman\u2019s 300mm capacity pushes gross margin toward the mid-60s while the broad cycle CEO Haviv Ilan described runs into 2028, $405 represents 38.9 times 2027 earnings \u2014 rich, but achievable.
\nWhat would push TXN down to $225?
\nNotably, no operational failure is required. At $225 the stock would still trade at 21.6 times 2027 earnings. The bear case is pure multiple compression: if investors re-rate TI toward historical analog multiples on the view that 2% five-year EPS growth does not justify 30-plus times earnings, an 18.5% decline follows even if the company hits every guidance number.
\nThis analysis is for information purposes only and does not constitute investment advice. Price targets are scenario estimates, not forecasts of certain outcomes. All market data is as of 6 August 2026.<\/p>\n","protected":false},"excerpt":{"rendered":"