Texas Instruments Incorporated (TXN): A Bull Case Theory 

We came across a bullish thesis on Texas Instruments Incorporated on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on TXN. Texas Instruments Incorporated’s share was trading at $182.60 as of December 3rd. TXN’s trailing and forward P/E were 30.63 and 24.81 respectively according to Yahoo Finance.

Texas Instruments (TXN), the world’s largest analog semiconductor supplier, is widely considered one of the highest-quality and most durable franchises in the chip industry. Its strength stems from deep manufacturing integration—producing ~90% of its output internally, mostly in U.S. fabs—combined with an unmatched analog portfolio of 80,000 products and over 100,000 customers. This structure provides cost advantages, supply-chain control, geopolitical insulation, and exceptionally diversified, long-lived revenue streams from industrial and automotive markets (~75% of revenue).

Yet TXN has faced a difficult stretch. Shares are down meaningfully amid an extended investment cycle, prolonged industry weakness, and eight quarters of negative growth. The latest earnings showed improving revenue but persistent margin pressure driven by heavy depreciation and low factory loadings. Demand remains cautious, especially across core industrial and automotive markets, and guidance continues to undershoot expectations. Cash flow has been heavily constrained by elevated capex, pushing the balance sheet into net-debt territory.

However, TXN is roughly 80% through its largest capex cycle, and management expects a sharp turnaround beginning in 2026 as spending normalizes, loadings rise, and 300-mm capacity ramps. Free cash flow per share is projected to rebound from 2024 lows toward an 11% annualized trend line. With rising incentives, durable end-market growth, and long operating lifecycles, TXN remains positioned for strong medium-term compounding. Valuation has reset from early-year peaks but is not yet compelling. At ~$168, projected returns to a 2027 fair value of ~$202 imply a 12.5% CAGR—solid but not deeply discounted. The stock screens as fairly valued, with a more attractive entry near $162.

Previously we covered a bullish thesis on Texas Instruments (TXN) by The Wolf of Harcourt Street in January 2025, whose share price has depreciated by 1.44% since coverage. The thesis highlights TXN’s durable analog leadership, strong manufacturing integration, and long-term advantages from its nearly completed 300-mm expansion. While earnings remain pressured by weak industrial demand and low factory loadings, analysts expect free-cash-flow recovery post-2026, keeping the long-term outlook constructive.

Texas Instruments Incorporated is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held TXN at the end of the second quarter which was 69 in the previous quarter. While we acknowledge the risk and potential of TXN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TXN and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.