Texas Instruments (TXN) Valuation Check After Recent Momentum Cools and Shares Drift Slightly Lower

Texas Instruments (TXN) has been drifting slightly lower this week, but the bigger story sits beneath the share price. Even with a modest pullback, the chipmaker’s multiyear returns still outpace the broader market.

See our latest analysis for Texas Instruments.

The recent pullback leaves Texas Instruments’ share price at $177.99, after an 11.71% 1 month share price return that has eased off and a more muted 1 year total shareholder return of negative 3 percent. This suggests momentum is cooling rather than accelerating.

If Texas Instruments’ steady but slowing trajectory has you thinking about what else is out there, this could be a smart moment to explore high growth tech and AI stocks.

With shares now sitting just below analyst targets, solid long term returns, and steady profit growth, investors face a familiar dilemma: is Texas Instruments quietly undervalued, or is the market already pricing in years of future gains?

Most Popular Narrative: 5.8% Undervalued

Compared with the last close at $177.99, the most widely followed narrative sees Texas Instruments’ fair value sitting modestly higher, hinting at upside driven by long term fundamentals rather than short term momentum.

Management is signaling that the benefits of recent U.S. tax incentives and R&D/capex expensing will materially lower future cash tax rates, bolstering free cash flow and enabling increased capital returns (dividends/buybacks), contributing to long term earnings per share expansion even in periods of muted sales growth.

Read the complete narrative.

Curious how tax savings, margin recovery, and a richer earnings base all feed into that higher valuation tag? Discover the precise growth and profitability path this narrative is betting on, and which future earnings multiple it assumes investors will still be willing to pay.

Result: Fair Value of $188.92 (UNDERVALUED)

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

However, sustained margin pressure from underutilized fabs or intensified competition in analog chips could quickly undermine the case for a steady, tax-fueled recovery.

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

Another View: Multiples Point to Richer Pricing

While the narrative based fair value suggests Texas Instruments is modestly undervalued, the price to earnings lens tells a different story. At 32.2 times earnings, the stock trades well above its own fair ratio of 28.9 times, even if it still looks cheaper than industry and peer averages.

This gap hints that investors may already be paying up for quality and stability, leaving less room for error if margins or growth disappoint from here. Is the premium simply the cost of safety, or a sign that expectations have drifted ahead of reality?

See what the numbers say about this price — find out in our valuation breakdown.

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 908 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 see the story differently or want to dig into the numbers yourself, you can craft a personalized view in just minutes: Do it your way.

A great starting point for your Texas Instruments research is our analysis highlighting 2 key rewards 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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