Analyses / TXN
Semiconductor leader with stretched valuation; recent selloff into strong fundamentals suggests tactical entry zone.
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The Thesis
▲ Bull Case
Market leader in analog & embedded processors; 57% gross margin, 34% operating margin, 28% net margin — best-in-class profitability. Strong balance sheet (4.35x current ratio). 1.9% dividend yield on stable payout. 52% rally in 3 months suggests institutional conviction post-trough. If cyclical recovery in industrial/auto accelerates, multiples could normalize upward.
▼ Bear Case
P/E 51.3x, forward P/E 55.2x — expensive even for quality. Price-to-FCF 105.97x is stretched. EPS down 16.6% YoY, revenue down 4.1% — cyclical trough ongoing. EV/EBITDA 36.2x leaves little margin for error. Meta/cloud giants shifting chip buys away from TXN's architecture. Payout ratio 99.96% (dividend consuming nearly all earnings) limits buyback flexibility. Sentiment article calls valuation 'rich' with 'muted upside.'
Valuation
overvalued — score 42/100
Multiples compressed only slightly from all-time highs despite -16.6% EPS decline. P/E 51.3x, forward P/E 55.2x, and price-to-FCF 105.97x are all elevated vs. historical 30–40x range. Margin quality (57% gross, 28% net) justifies premium but not this wide. EV/EBITDA 36.2x leaves no room for cyclical disappointment.
Technical Levels
Support · $280.00 (3-month support / near entry zone) · $268.00 (52-week moving average area) · $152.73 (52-week low (unlikely in base case))
Resistance · $305.00 (Day high; 1-month resistance) · $334.03 (52-week high) · $350.00 (Bull target if cycle recovers)
RSI: not_provided
Financial Health
Score 88/100. Fortress balance sheet with exceptional liquidity (current ratio 4.35x, quick ratio 2.17x). Margin profile (57/34/28) is best-in-class for semiconductors. Payout ratio at 99.96% is a constraint on capital flexibility but not a solvency risk given cash generation. No visible debt stress. Overall financial health is excellent.
Catalysts
| Q2 2026 Earnings Conference Call | imminent (webcast scheduled) | high — guidance/margin outlook will confirm if trough is real or earnings miss ahead |
| Cyclical demand recovery (industrial/auto) | 2025 (data-dependent) | high — would validate base-case 320 target and rerate multiples higher |
| Meta/cloud custom silicon erosion | ongoing (quarterly visibility) | medium-high — could cap upside or force margin pressure if accelerates |
| Dividend sustainability review | 2025 (if earnings miss continues) | high — 99.96% payout ratio is unsustainable if EPS doesn't recover; cut would spike volatility |
Risk Flags
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Unlock TXN free →Recent News
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More Analyses
TXN FAQ
Is TXN a buy right now?
Texas Instruments Inc's current read is a value_trap / quality_at_premium setup with 62 confidence over a 3-6 months horizon. Valuation: overvalued. See the full bull and bear case above, or run a live analysis for the exact entry, target and stop.
Is TXN overvalued?
overvalued (valuation score 42/100). Multiples compressed only slightly from all-time highs despite -16.6% EPS decline. P/E 51.3x, forward P/E 55.2x, and price-to-FCF 105.97x are all elevated vs. historical 30–40x range. Margin quality (57% gross, 28% net) justifies premium but not this wide. EV/EBITDA 36.2x leaves no room for cyclical disappointment.
What are the risks of buying TXN?
P/E 51.3x, forward P/E 55.2x — expensive even for quality. Price-to-FCF 105.97x is stretched. EPS down 16.6% YoY, revenue down 4.1% — cyclical trough ongoing. EV/EBITDA 36.2x leaves little margin for error. Meta/cloud giants shifting chip buys away from TXN's architecture. Payout ratio 99.96% (dividend consuming nearly all earnings) limits buyback flexibility. Sentiment article calls valuation 'rich' with 'muted upside.'