Texas Instruments Incorporated

(NASDAQ Global Select)
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Somewhat Bullish +45

Texas Instruments Stock Fell 8% in a Day. Here’s Where the Stock Could Go in 2026 - TIKR.com

AI-generated analysis

πŸ“‰ TXN stock fell 8.40% on June 23 to close at $304.36 due to a sector-wide chip selloff triggered by memory maker declines in Asia.

πŸš€ The company reported first-quarter earnings that beat estimates, driving a 19.43% jump in share price earlier in the year.

πŸ’Ύ Data center revenue grew 90% year-over-year, significantly outpacing the broader market growth rate of approximately 65%.

🏭 Texas Instruments is completing a six-year, $20 billion-plus program to build internal 300-millimeter wafer fabs in Texas and Utah.

πŸ’° Gross margins reached 57.3% over the last twelve months as the company shifts production from external foundries to internal facilities.

πŸ“Š The stock trades at a premium valuation of roughly 25 times NTM EV/EBITDA, higher than the peer median of 27 times.

πŸ‘” Executives, including the retiring CFO, sold stock over the past quarter ahead of an August leadership transition to Julie Knecht.

🎯 TIKR's valuation model projects a mid-case target price of $520 by the end of 2030, representing about 71% total return.

⚠️ The primary risk involves rising depreciation costs from new fabs potentially pressuring margins if growth stalls.

πŸ“… Investors are watching the July 22 second-quarter earnings report to confirm if data center growth can sustain its current pace.

Bullish Signals
  • Data center segment grew 90% year-over-year, significantly outperforming the market's estimated 65% growth rate.
  • First-quarter results beat both earnings and revenue estimates, leading to a 19.43% stock price increase.
  • Internalization strategy is successfully lifting gross margins to 57.3% by reducing reliance on external foundries.
  • CEO Haviv Ilan projects that free cash flow will grow as capital expenditures decrease and demand increases.
  • TIKR's mid-case valuation model targets a stock price of $520 by the end of 2030, implying strong long-term upside.
Risk Factors
  • Stock trades at a premium valuation of roughly 25 times NTM EV/EBITDA, which is above the peer median and Broadcom's 19x multiple.
  • Consensus analyst price targets average around $294, suggesting the current market price may be overvalued relative to Wall Street expectations.
  • Industrial segment remains 15% below its prior peak, indicating a recovery that has not yet fully materialized.
  • Rising depreciation costs associated with new fabs could pressure net income margins if revenue growth slows.
  • Executive stock sales by the CFO and other leaders ahead of the August leadership change may signal caution regarding near-term prospects.
Full Analysis
Texas Instruments (TXN) stock experienced a sharp 8.40% decline on June 23, closing at $304.36, despite a strong year-to-date rally of roughly 80%. The selloff was driven by a broader global chip market downturn triggered by memory sector losses in Asia, rather than any fundamental issues within Texas Instruments itself. This event highlighted the stock's vulnerability to sector-wide momentum shifts even after reporting a beat on earnings and revenue in the first quarter. The company's recent performance is anchored by a significant data center segment that grew 90% year-over-year, far exceeding the market's estimated growth rate of 65%. CEO Haviv Ilan attributes this surge to a six-year, $20 billion-plus investment in internal 300-millimeter wafer fabrication facilities in Texas and Utah. This strategy of internalization is designed to boost gross margins, which stood at 57.3% over the last twelve months, by reducing reliance on external foundries. Analysts are debating whether TXN's current valuation premium is justified given its high price-to-earnings multiple relative to peers like Broadcom. The stock trades near 25 times next-twelve-months EV/EBITDA compared to a peer median of 27 times, creating potential downside risk if data center growth slows or industrial recovery stalls. Key upcoming catalysts include the second-quarter earnings report on July 22 and leadership changes in the CFO role, which could influence investor sentiment. TIKR's valuation model projects a mid-case target price of around $520 by the end of 2030, implying a total return of approximately 71% over four and a half years. This projection relies on sustaining high data center growth rates and confirming an industrial recovery that is currently 15% below its prior peak. The primary risk identified is depreciation costs rising as new fabs come online, which could pressure margins if revenue growth fails to keep pace with capital expenditures.