Overview
Texas Instruments
TXN · NASDAQQ3 2026Semiconductors · Analog and Embedded Processing
Since the Report + 7.2%
Revenue grew 27.7% year over year, EPS beat the estimate by 7.8%; the stock rose 1.1% in its first reaction.
- RevenueQ3
- $6.06B
- Estimate $5.90B · 2.6% Beat
- EPSGAAP
- $2.62
- Estimate $2.43 · 7.8% Beat
Verdict
BUYTexas Instruments beat expectations on revenue, earnings and guidance in the third quarter; revenue rose 27.7% to $6.06 billion. The stock had gained 2.5% in the session before the report and is flat after hours, so part of the good news was already priced in. The next thing to watch is whether the $6.05 billion guidance midpoint for the fourth quarter holds.
Close on Report DayOct 21
$284.65▲ 1.1%Report-Day Move
- Market Cap(Today)
- ≈ $279 B
- 1Y Return(At Report)
- + 57%
- P/E(At Today's Price · $7.71 · Trailing 12M)
- 39.6
- Net Margin(Trailing 12M)
- 34.3%
Earnings Summary
In 30 Seconds- Revenue rose 27.7% to $6.06B and beat the $5.90B market expectation by 2.6%.
- The fourth-quarter revenue guidance midpoint of $6.05B is 5.6% above estimates; gross margin rose to 64.2%.
- The stock had gained 2.5% before the report and is flat after hours, because part of the good news was priced in.
The Numbers
Gross Margin
64.2%
Year Ago 57.4% · 6.8-Point Expansion
Operating Margin
47.5%
Year Ago 35.1% · 12.4-Point Expansion
Free Cash Flow (TTM)
$8.42B
▲ 249% YoY · 40.6% of Revenue
Stock Reaction
▲ 1.1%
After Hours 7:59 P.m. ET · Oct 21
Quarterly Revenue ($ Billion)
4.74
Q3 25 · $4.74 B
4.42
Q4 25 · $4.42 B · QoQ − 6.7%
4.83
Q1 26 · $4.83 B · QoQ + 9.1%
5.46
Q2 26 · $5.46 B · QoQ + 13.2%
6.06
Q3 26 · $6.06 B · QoQ + 10.8% · YoY + 27.7%
5.80–6.30
Q4 26E · 5.80–6.30 · QoQ − 0.1% · YoY + 36.8%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
- Q4 26E
Q4 2026 Company Guidance
- Revenue (Q4 26)5.8 – 6.3 billion5.8 billion6.3 billion
Midpoint 6.05 · Market Expectation 5.735.6% Above Estimate ▲
- EPS (Q4 26)2.45 – 2.79 $2.45 $2.79 $
Midpoint 2.62 · Market Expectation 2.2814.9% Above Estimate ▲
- Tax Rate (Q4 26)13%
Given on Call · 13–14% for 2027
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±15% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Analog$4.91 BShare 81.1%▲ 32.0% YoY
- Embedded Processing$858 MShare 14.2%▲ 21.0% YoY
- Other$286 MShare 4.7%▼ 6.0% YoY
Key Metrics
Free Cash Flow (TTM)
$8.42 B
▲ 249.0% YoYPress Release
Operating Cash Flow (TTM)
$9.90 B
▲ 43.0% YoYPress Release
Free Cash Flow / Revenue
40.6%
Press Release
Capital Expenditures (Quarter)
$463 M
▼ 61.0% YoYPress Release
Inventories
$4.67 B
▼ 3.2% YoYPress Release
Dividend Per Share
$1.42
▲ 4.4% YoYPress Release
Shares are computed over the segment total: $6.06 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“On the contrary, I wish they had a little bit more.”
- Lean Auto Customer Inventory
- Data Center Up 95%
- Lead Times Ticked Higher
Summary and Review
Summary
Texas Instruments reported third-quarter revenue of $6.06 billion. That is up 27.7% year over year and 11% from the prior quarter. Revenue beat the $5.90 billion market expectation by 2.6%, so the revenue gate is open. Earnings per share were $2.62, 7.8% above the $2.43 estimate. The midpoint of fourth-quarter revenue guidance is $6.05 billion. That is 5.6% above the $5.73 billion estimate, so the guidance gate is open too.
The stock closed the earnings-day session up 2.5% at $284.65. The release came right after the close, and the price swung between $281 and $293 after hours. As of 16:40 p.m. ET the price was $284.25, a change of −0.1% from the close. The market read this report not as a surprise but as a confirmation. The stock is up 57% over the past year. That rally appears to have priced in much of the recovery already.
All three gates are open, so the score is 86 and the view is buy. Profitability is growing faster than revenue: gross margin widened 6.8 points in a year to 64.2%. With lower capital spending, trailing twelve-month free cash flow reached $8.42 billion. Annual revenue growth has accelerated for four straight quarters. The caveats are limited but real. A maturing upcycle and the debt from the $7.5 billion Silicon Labs deal keep the score off the top of the band.
Full Review
Growth has accelerated for four quarters.
Third-quarter revenue was $6.06 billion. A year earlier it was $4.74 billion. Annual growth over the last four quarters ran at 10%, 19%, 23% and 27.7%. Sequential growth was strong too: revenue was 11% above the second quarter's $5.46 billion. The result landed in the upper half of the company's own guidance range. The July range was $5.65 billion to $6.15 billion, with a $5.90 billion midpoint. Actual revenue came in 2.6% above that midpoint. The fourth-quarter range is $5.80 billion to $6.30 billion. The midpoint implies a flat quarter sequentially. Year over year, it means 36.8% growth. Last year, fourth-quarter revenue fell 7% sequentially. A flat outlook therefore suggests demand is still holding up. On the call, CEO Haviv Ilan said he sees no inventory build at customers.
Analog is gaining share.
Analog revenue was $4.91 billion, up 32% year over year. The segment's share of total revenue rose from 78.6% to 81.1% in a year. Analog operating profit grew 69% to $2.51 billion. Embedded Processing revenue rose 21% to $858 million. That segment's operating profit more than doubled to $227 million. Other revenue fell 6% to $286 million. CEO Haviv Ilan said growth spread across industrial, automotive and data center markets. The call added the market breakdown. Industrial grew more than 40% year over year and automotive about 15%. Data center grew about 95% and reached 13% of revenue. Growth that does not rest on one customer or one market is a reassuring sign in a cyclical recovery. Analog and Embedded Processing together make up 95% of revenue.
The margins are coming from the fabs.
Gross margin was 64.2%. It was 57.4% a year earlier and 61.4% in the prior quarter. That is a 6.8-point expansion year over year and 2.8 points sequentially. Operating margin rose to 47.5%, 12.4 points above last year's 35.1%. The source of the jump is cost discipline. R&D expense rose only 2% and SG&A rose 4%. Revenue, meanwhile, grew 27.7%. The company spent years investing in 300mm fabs. Rising volume now sits on top of that fixed cost base. Operating profit rose 73% to $2.87 billion. Net income rose 78% to $2.43 billion. Part of the margin expansion reflects last year's low base, when the fabs ran at low utilization. On the call, management said it made modest price increases in the second half, mainly in Analog.
The cash machine is running again.
Capital spending in the quarter was $463 million. In the same quarter last year it was $1.20 billion. Trailing twelve-month operating cash flow rose 43% to $9.90 billion. Free cash flow for the same period was $8.42 billion. A year earlier it was $2.42 billion. Free cash flow as a share of revenue rose from 14.0% to 40.6%. The company paid $1.30 billion in dividends in the quarter. The dividend per share rose 4.4% to $1.42. Buybacks were limited to $48 million. The company expects 2026 capex near the high end of its $2-3 billion range. One reason is the Silicon Labs deal. The company will fund the $7.5 billion purchase with cash and debt. For how to read cash flow, see our guide.
Next quarter, watch one line.
In the fourth quarter, the one line to watch is revenue. The company's guidance midpoint is $6.05 billion. If revenue comes in above that, the recovery has beaten seasonal weakness. In that case annual growth would top 37%. If revenue falls below the $5.80 billion low end of the range, the third quarter may have been the peak of this cycle. The second gauge is gross margin. Holding 64.2% would show that fab utilization remains high. A drop below 62% would mean volume growth is slowing. The third gauge is annual growth in Analog. If it stays above 30%, the recovery is still running in the core business. A drop below 20% would suggest the cycle is turning from its peak. For a general method, see our guide on how to read earnings day.
Looking Ahead
Strengths and Risks
5 Strengths · 5 RisksStrengths
5- Revenue, earnings per share and fourth-quarter guidance all came in above market expectations.
- Gross margin widened 6.8 points in a year to 64.2%.
- Trailing twelve-month free cash flow of $8.42 billion is more than triple the year-earlier level.
- Analog grew 32% and its share of total revenue rose to 81.1%.
- Per the call breakdown, data center revenue grew about 95% year over year and reached 13% of revenue.
Risks
5- Annual growth has accelerated for four quarters, and a maturing cycle is the main risk.
- The $7.5 billion Silicon Labs purchase will be partly funded with debt.
- Other segment revenue fell 6% year over year.
- The stock is up 57% over the past year, and much of the good news is priced in.
- Personal electronics revenue was flat year over yearGrowth relies on industrial and data center.
What to Watch
2- Fourth-quarter results are expected in late January 2027.
- The Silicon Labs acquisition is expected to close in the first half of 2027, subject to regulatory approvals.
Upcoming Earnings
To Understand This