GET DAILY SIGNALSTexas Instruments (TXN) Delivers Strong Q3 Results with +28% Revenue Growth
Key Takeaways
- Texas Instruments reported third quarter 2026 revenue of $6.06 billion, up 28% year over year and 11% sequentially.
- Diluted earnings per share (EPS) reached $2.62, up 77% from $1.48 a year ago and ahead of consensus estimates near $2.40.
- Growth was broad-based, with industrial revenue up more than 40%, automotive up mid-teens, and data center up roughly 95% year over year.
- Gross margin climbed to 64%, while operating profit rose 73% year over year to $2.87 billion, or 47% of revenue.
- Fourth quarter guidance of $5.80 billion to $6.30 billion in revenue and $2.45 to $2.79 in EPS came in above Street expectations.
- The company raised its dividend by 7% to $1.52 per share, marking its 23rd consecutive year of dividend increases.
Earnings Context and Why It Matters
Texas Instruments is one of the world's largest analog semiconductor makers, and its results are closely watched as a bellwether for industrial, automotive, and broader chip demand. After a prolonged cyclical downturn, the company's third quarter 2026 report signaled a clear inflection, with double-digit growth across nearly every end market and region. Because Texas Instruments sells a vast range of foundational chips into diverse industries, its performance offers investors an early read on the health of the global economy. Strong results, combined with above-seasonal forward guidance, reinforce confidence that the semiconductor recovery is broadening beyond AI-driven data centers into more traditional markets. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Reported Results
Texas Instruments reported third quarter 2026 revenue of $6.06 billion, up 28% from $4.74 billion in the prior-year period and up 11% sequentially. Diluted EPS was $2.62, a 77% increase from $1.48 a year earlier, and included a $0.01 reduction from discrete tax items that was not in the company's original guidance. Net income rose 78% to $2.43 billion.
By segment, analog revenue grew 32% to $4.91 billion, while embedded processing grew 21% to $858 million. Gross profit was $3.9 billion, or 64% of revenue, up 280 basis points sequentially. Operating profit reached $2.87 billion, up 73% year over year. On a trailing 12-month basis, cash flow from operations totaled $9.9 billion, and free cash flow reached $8.4 billion, aided by $1.6 billion in CHIPS Act incentives. From what I see, these cash flow figures highlight the efficiency gains as volumes recover.
Market Reaction and Investor Sentiment
Texas Instruments' results beat expectations across both revenue and EPS, and its fourth quarter guidance came in comfortably above analyst projections. Despite the strong report, the stock traded roughly flat in the immediate aftermath, reflecting a share price that had already risen substantially in the months leading into earnings. Investors broadly interpreted the results as confirmation of a durable cyclical recovery, with particular enthusiasm around the record industrial performance and the near-doubling of data center revenue. The company's ability to expand margins sharply on higher revenue and to signal above-seasonal demand into year-end reinforced a constructive, though already well-positioned, investor sentiment.
Forward Outlook and Key Factors to Monitor
Texas Instruments guided fourth quarter 2026 revenue to a range of $5.80 billion to $6.30 billion and EPS to $2.45 to $2.79, above consensus and reflecting above-seasonal demand expectations. Management attributed the strength to ongoing momentum in industrial, automotive, and data center markets, with data center now representing about 13% of revenue and less exposed to seasonal swings.
Investors should monitor several factors in the quarters ahead. Gross margin sustainability will be a focus, given that incremental margins reached roughly 90% in the third quarter, well above the company's longer-term 75% to 85% target. Pricing dynamics also bear watching, as management noted an uptick in analog pricing during the second half of 2026 after a flat first half, with annual negotiations for 2027 still underway.
Capital expenditure and capacity expansion remain key themes, with full-year 2026 spending expected in the $2 billion to $3 billion range and lead times on manufacturing equipment beginning to extend. Finally, inventory levels, which stood at 194 days, and the pace of the company's 300mm wafer production ramp will help determine how efficiently Texas Instruments can convert rising demand into cash flow over the coming year. I’m watching this closely as these metrics will influence the pace of any further re-rating.
Refining My Semiconductor Watchlist with AI Tools
In my regular research workflow, I turn to Tickeron’s AI-powered screening capabilities to quickly identify stocks showing similar technical and fundamental patterns across the semiconductor space. This helps me compare TXN against peers on metrics like revenue growth, margin trends, and AI-driven signals without spending hours on manual analysis. It has become a practical way to stay on top of recovery themes in the sector.
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Financial writer and active order flow futures trader with a focus on fundamental analysis, macroeconomic factors, and equity research. I make in-depth blogs on stocks and ETFs, bridging the gap between raw market data and real-world trading decisions.
TXN's RSI Indicator leaves 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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a manufacturer of integrated circuit semiconductors and calculators
Industry Semiconductors
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