GET DAILY SIGNALSTexas Instruments (TXN) Delivers Strong Q3 2026 Earnings with Broad-Based Growth
Key Takeaways
- Texas Instruments (TXN) reported third quarter 2026 earnings per share (EPS) of $2.62, up from $1.48 a year earlier and above the analyst consensus of roughly $2.42.
- Revenue rose 28% year over year to $6.06 billion, surpassing Wall Street's estimate of about $5.92 billion, driven by broad-based growth in industrial, automotive, and data center markets.
- Analog revenue grew 32% to $4.91 billion, while Embedded Processing increased 21% to $858 million.
- The company issued fourth quarter guidance above estimates, projecting revenue of $5.8 billion to $6.3 billion and EPS of $2.45 to $2.79.
- Free cash flow (cash generated after capital spending) surged to $8.4 billion on a trailing twelve-month basis, supporting a 7% dividend increase.
Why These Results Matter for the Chip Cycle
As one of the first major semiconductor companies to report each quarter, Texas Instruments (TXN) serves as a bellwether for the broader chip industry and the global electronics cycle. Its analog and embedded chips show up in cars, factory equipment, and consumer devices, giving investors a timely signal on industrial and automotive demand. After a period of inventory adjustments, I was watching for evidence that a recovery was underway. The third quarter 2026 results, covering the period ended September 30, 2026, delivered that signal, with management pointing to growth across every end market and region on both a sequential and year-over-year basis.
Breaking Down the Reported Numbers
Texas Instruments (TXN) posted $6.06 billion in revenue for the third quarter of 2026, up 28% from $4.74 billion a year ago and ahead of consensus estimates of about $5.92 billion. Earnings per share came in at $2.62, up 77% from $1.48 a year earlier and above the analyst consensus of roughly $2.42. Net income climbed 78% to $2.43 billion, while operating profit rose 73% to $2.87 billion.
By segment, Analog revenue increased 32% year over year to $4.91 billion, and Embedded Processing rose 21% to $858 million, while the smaller "Other" segment declined 6% to $286 million. Gross profit margin reached 64% of revenue. On a trailing twelve-month basis, cash flow from operations totaled $9.9 billion and free cash flow reached $8.4 billion, up sharply from $2.4 billion a year ago, partly reflecting lower capital expenditures and CHIPS Act incentives. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Market Reaction and Valuation Considerations
Texas Instruments (TXN) shares closed up 2.47% at $284.65 on the day of the report, though the stock slipped modestly in after-hours trading as some investors weighed valuation against the strong but not blowout results. The market's muted initial response reflected the stock's premium valuation following a roughly 94% run-up in the first half of the year; shares still traded at a relatively high multiple of forward earnings. Nevertheless, the print reinforced the fundamentals behind the rally, with growth across industrial, automotive, and data center markets and fourth quarter guidance that came in above consensus. Sentiment heading into the event had been cautious, as investors braced for potential softness in guidance.
Looking Ahead: Guidance and Key Factors to Watch
For the fourth quarter of 2026, Texas Instruments (TXN) guided revenue in the range of $5.8 billion to $6.3 billion and EPS between $2.45 and $2.79, both above analyst estimates. Management expects an effective tax rate of about 13% in the fourth quarter and 13% to 14% for 2027.
Investors should watch several factors in the quarters ahead. First, whether the recovery in industrial demand, which grew more than 40% year over year, can be sustained beyond restocking. Second, the pace of data center momentum, which management said grew about 95% year over year, given rising demand for power-management chips used in AI infrastructure.
Margin trajectory also matters, since the company's long-term manufacturing plan and 300mm wafer capacity are central to its free-cash-flow growth strategy. Finally, inventory levels, which stood at 194 days, and capital expenditure trends will signal how efficiently Texas Instruments (TXN) can convert demand into cash and shareholder returns.
Tools That Help Refine Sector Analysis
When evaluating semiconductor names like Texas Instruments (TXN), I find it useful to cross-reference results with AI-driven screening tools. Tickeron’s AI Screener allows me to quickly filter peers by fundamentals, technical patterns, and performance metrics, which helps put individual company results into broader context without spending hours on manual comparisons.
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
TXN's RSI Oscillator recovers from overbought zone
The 10-day RSI Indicator for TXN moved out of overbought territory on October 07, 2026. This could be a sign that the stock is shifting from an upward trend to a downward trend. Traders may want to look at selling the stock or buying put options. Tickeron's A.I.dvisor looked at 27 instances where the indicator moved out of the overbought zone. In 19 of the 27 cases the stock moved lower in the days that followed. This puts the odds of a move down at 70%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 15, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on TXN as a result. In 63 of 91 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 69%.
The Moving Average Convergence Divergence Histogram (MACD) for TXN turned negative on October 14, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 46 similar instances when the indicator turned negative. In 30 of the 46 cases the stock turned lower in the days that followed. This puts the odds of success at 65%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where TXN declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 60%.
TXN broke above its upper Bollinger Band on October 02, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. 40 of 61 cases where TXN's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 66%.
TXN moved above its 50-day moving average on September 25, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for TXN crossed bullishly above the 50-day moving average on September 29, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 12 of 18 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 67%.
Following a +3.08% 3-day Advance, the price is estimated to grow further. Considering data from situations where TXN advanced for three days, in 177 of 288 cases, the price rose further within the following month. The odds of a continued upward trend are 61%.
The Aroon Indicator entered an Uptrend today. In 127 of 239 cases where TXN Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 53%.
Fundamental Analysis (Ratings)
The Tickeron PE Growth Rating for this company is 16 (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is 29 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is 32 (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 76, placing this stock better than average.
The Tickeron Price Growth Rating for this company is 43 (best 1 - 100 worst), indicating steady price growth. TXN’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of 78 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: TXN's P/B Ratio (14.436) is slightly higher than the industry average of (6.538). P/E Ratio (43.064) is within average values for comparable stocks, (23.955). Projected Growth (PEG Ratio) (0.991) is also within normal values, averaging (3.761). Dividend Yield (0.020) settles around the average of (0.011) among similar stocks. P/S Ratio (12.255) is also within normal values, averaging (45.794).
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General Information
a manufacturer of integrated circuit semiconductors and calculators
Industry Semiconductors
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