Morningstar

Texas Instruments Earnings: All Aboard the AI Train

We’ve raised our fair value estimate of Texas Instruments stock.

Collage illustration for Technology Sector with a semiconductor chip.
Securities in This Article
Texas Instruments Inc
(TXN)

Key Morningstar Metrics for Texas Instruments

  • Fair Value Estimate
    : $260.00
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : Wide
  • Morningstar Uncertainty Rating
    : High

What We Thought of Texas Instruments’ Earnings

Texas Instruments TXN reported first-quarter revenue of $4.8 billion, up 19% year over year and above the high end of guidance. TI guided for second-quarter revenue of $5.20 billion, representing 17% year-over-year growth, well ahead of the $4.87 billion FactSet consensus estimate.

Why it matters: TI reported a blowout quarter, as the cyclical recovery in industrial semis is in full swing while the firm is tied into the artificial intelligence infrastructure buildout. TI’s data center chip business grew 90% year over year and looks to be a rapid and material growth driver for the company.

  • Industrial is TI’s largest end market at 33% of revenue in 2025, and revenue rose in the first quarter by about 30% year over year. TI is seeing a recovery in industrial chip orders across all geographies and subsegments, such as robotics and aerospace/defense.
  • TI’s data center exposure is mostly in power semis, which we believe are built in-house. Its focus on having abundant capacity to take on new customer orders appears to be serving the company quite well in AI.

The bottom line: We raise our fair value estimate for wide-moat TI to $260 per share from $210. Shares appear fairly valued as we model stronger long-term revenue growth and higher gross margins as TI further participates in the AI buildout. Shares rose 10% after hours, and we think the reaction is justified.

  • We now model TI growing at a roughly 10% pace from 2027 through 2030, ahead of our prior assumptions of mid- to high-single-digit growth for the firm and its analog peers. The incremental growth should stem from new power semis content going into AI rack-scale solutions.
  • TI also anticipates that strong demand should support chip pricing in 2026. Pricing in recent months has been flattish versus the industry norm of low-single-digit declines. Pricing in the second half of the year may rise sequentially as industrial and data center customers scramble for supply.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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