Texas Instruments (TXN): Evaluating Valuation After Strong Q2, $60B U.S. Investment, and Major Apple Deal

If you have been eyeing Texas Instruments (TXN) lately, a series of headline-making events could be making the stock hard to ignore. In just the past month, Texas Instruments reported second-quarter results that came in ahead of expectations, lifted its guidance, and received a wave of positive sentiment. In addition, the company announced an ambitious $60 billion investment in new U.S. chip manufacturing facilities, winning substantial government incentives and securing Apple’s commitment as a major customer. For investors, these developments present a story of a chipmaker investing heavily in domestic growth and industry leadership.

Looking at the stock’s recent moves, momentum has been quietly building. Texas Instruments shares are up nearly 12% over the past month, recovering ground despite posting just a 2% gain over the last year. This rebound reflects shifting market confidence; the combination of strong results, notable partnerships, and significant long-term investments is helping to ease concerns over tariffs and industry cycles that emerged earlier this year. With annual revenue and net income both increasing in the double digits and a proven track record of strategic, long-term capital allocation, the narrative around Texas Instruments is evolving.

After this latest surge, some may wonder if shares now represent an opportunity for future growth, or if the market has already priced in these optimistic projections. Let’s examine what the numbers indicate about value and risk going forward.

Most Popular Narrative: Fairly Valued

According to community narrative, Texas Instruments is currently trading very close to its estimated fair value, with analysts suggesting little deviation from the consensus price target.

Strategic investment in U.S.-based 300mm wafer fabs and a diversified global manufacturing footprint uniquely position TI to benefit from evolving supply chain localization and customer preferences for geopolitically resilient suppliers. This advantage is likely to help win incremental business, strengthen preferred supplier status, and improve long-term gross margins and pricing power.

What’s the financial magic behind this consensus? The analysts’ model hinges on a few surprisingly bold growth levers and margin improvements that could shape the company’s value for years. Think you know what’s driving it? That is just the start. Unpack the real numbers powering this near-fair value call.

Result: Fair Value of $205.73 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, analysts warn that intensifying competition and potential manufacturing overcapacity could challenge Texas Instruments' growth assumptions. These factors may put future margins and earnings at risk.

Find out about the key risks to this Texas Instruments narrative.

Another View: The Discounted Cash Flow Approach

Looking through the lens of our DCF model, Texas Instruments appears overvalued when projected cash flows are tallied up today. This perspective challenges the more optimistic outlook from analysts who rely on earnings multiples. Which side tells the truer story?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Texas Instruments for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Texas Instruments Narrative

If you have a different take or want to examine Texas Instruments’ data firsthand, it only takes a few minutes to shape your own perspective, so you can do it your way.

A great starting point for your Texas Instruments research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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