Is Texas Instruments Stock Really Expensive?

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Texas Instruments (TXN) stock trades at 39.3 times its adjusted earnings for the twelve months to June 2026. That multiple looks steep for a chip maker whose sales were shrinking two years ago. These trailing earnings add after-tax stock-based pay to normalized net income, and they exclude the September quarter, when net income climbed to $2.43 billion from $1.36 billion a year earlier. You are not buying just one year of profit, however, and the price looks different over the next two years. So is the stock still expensive once you count the profit Texas Instruments is expected to earn?

How Much Texas Instruments Stock Costs On Forecast Profit

Based on the consensus forecast, you pay 32.5 times the earnings Texas Instruments is expected to make in fiscal 2026. The price falls to 27.4 times earnings on the forecast for fiscal 2027, compared with the 39.3 times multiple you pay on trailing adjusted earnings. The trailing figure adds back after-tax stock pay; on reported net income it is 42.1 times. The forecasts may use a different measure, so part of that gap could come from the change of measure. Counting the September quarter reported on October 21, the stock trades at about 35.8 times reported net income for the twelve months to September 2026, still above the 32.5 times forecast for fiscal 2026.

What Texas Instruments Has To Deliver For That Price

The consensus forecast expects Texas Instruments to grow revenue 16.5% in fiscal 2027, reaching $25.8 billion. Net income in the forecast grows by a faster 18.4%, meaning the projections also have margins widening a little. This anticipated sales growth represents a step down from the company’s recent pace. Revenue rose 16.7% over the twelve months to June 2026, and 22.8% in fiscal Q2 2026 alone.

Performance in the latest quarter was stronger still. Revenue rose 28% from a year earlier in fiscal Q3 2026. Management said on the October 21, 2026 call that industrial and data center sales led the increase. The company guided fiscal Q4 2026 revenue to a range of $5.8 billion to $6.3 billion, compared with the $6.06 billion it reported for fiscal Q3.

The margin forecast is already within reach. In the consensus forecast, Texas Instruments earns a net margin of 35.4% in fiscal 2026, compared with 28.4% in fiscal 2025, its last full year. The company’s reported net margin already reached 36.2% in fiscal Q2 2026 and 40% in fiscal Q3.

Where Texas Instruments Could Fall Short Of The Forecast

Revenue is the first place the forecast could miss, because management said the margin gain in fiscal Q3 2026 came mostly from higher revenue, with some help from pricing and mix. Executives call this a strong cyclical recovery, and the cycle has turned against Texas Instruments before. Revenue fell 14.5% in the twelve months to June 2024. If sales growth slows, the margin would slip alongside it, and the forecast would come down on both counts.

Supply is the second place. Management said Texas Instruments is not getting as much as it wanted from its outside assembly partners, and that lead times on new tools are extending. The company is ramping a new site in Malaysia, but a shortfall in output would cap sales and pull the forecast down. The consensus forecast for fiscal 2027 is also uncertain. The gap between the highest and lowest EPS estimates equals 27.8% of the consensus forecast.

If the forecast arrives, the forward multiples offer a fair picture of what you pay for Texas Instruments. This forecast depends on revenue growth, and the margin moves with it. A slowdown there would make the stock a riskier bet, priced for profit the company has not yet earned. Texas Instruments’ net margin is the measure to watch when the company next reports, expected in January 2027.

Is Too Much Of Your Wealth Riding On One Stock?

What Texas Instruments is worth depends on profits it has not yet earned. When one position grows into a large part of your wealth, a sharp fall can hurt your whole plan, and selling to spread the money out can bring a large tax bill. Our partner advisory firm offers a free strategy review of ways to protect a concentrated position and unwind it with less tax.

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