TXN Surges 67% Over the Past Year: Is the Stock Still Worth Buying?

Texas Instruments gained 66.6% over the past year; Q2 2026 revenue rose 23% year over year to $5.46 billion and non-GAAP EPS increased 52% to $2.14. Data-center revenue doubled year over year and grew 20% sequentially, while Q3 guidance implies approximately 25% revenue growth and nearly 62% EPS growth at the midpoint. The company plans to manufacture more than 95% of wafers internally by 2030 and estimates $7.5 billion-$9.5 billion in lifetime government incentives. The article sees further upside despite a 30.99 forward P/E versus the industry’s 19.04, citing growth, cash generation and shareholder returns.

Analysis

The key debate is earnings durability, not whether AI requires more power. TXN’s data-center exposure is a useful demand tailwind, but it does not insulate the company from analog-cycle normalization: if industrial and automotive demand remain soft, AI growth may be too small to sustain the current earnings trajectory. A further risk is that internal wafer capacity converts cyclical weakness into operating deleverage; the 2030 in-house target can improve supply control over time, but near-term returns depend on utilization, yield and execution. Incentives reduce project economics only as eligible spending and milestones occur, so they should not be treated as an immediate offset to capex or a guarantee of higher margins.

Near term, strong guidance can support momentum, but the bar is now higher after substantial outperformance and premium valuation. Over 1–3 months, watch whether data-center growth translates into consolidated growth and whether management raises expectations beyond the current outlook. Over 6–18 months, utilization and free-cash-flow conversion are the decisive tests. The contrarian risk to the bullish framing is that investors capitalize a cyclical rebound and a fast-growing but still limited data-center business as though both were durable structural growth. Conversely, if broad analog demand recovers while AI demand persists, earnings growth could validate the premium. No clean valuation pair is established by the article’s cross-company P/E comparisons; business mix and earnings definitions may differ.

Key Decisions for Investors

• Do not chase TXN on the article’s bullish framing alone. For portfolios seeking exposure, stage a long entry after a pullback or around the next results, contingent on guidance holding and data-center demand remaining incremental rather than masking weakness elsewhere.
• Track quarterly utilization/capacity absorption, non-data-center demand, gross-margin direction, capex and free-cash-flow conversion. A guidance cut, weaker order trends, or rising capacity with poor utilization would falsify the near-term bull case and argue for reducing exposure.
• Treat CHIPS-related support as conditional project economics, not near-term earnings protection. Reassess if incentives, construction timing, yields or capacity ramp milestones change; execution slippage combined with weaker demand is the adverse scenario.
• For a relative-value expression, prefer waiting for confirmation rather than shorting named peers on the article’s simplistic P/E comparison. If TXN’s estimates stop moving higher while its valuation remains premium, consider trimming or hedging the position against a broad semiconductor benchmark; if estimates continue to rise and cash conversion holds, retain exposure.