Did The Market Read Texas Instruments Stock Right?
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Texas Instruments (TXN) stock climbed 91.2% in the year to November 10, 2026, compared with an 11.4% gain for the S&P 500. The advance stretched across four quarterly reports. The stock posted its largest one-day gain of the year, 19.4%, on April 23, 2026, the day after the first-quarter report. In that report, the company forecast second-quarter revenue above Wall Street estimates on data center demand. How much did that year of results change what Texas Instruments earns?
Texas Instruments’ Profit Grew Faster Than Revenue
Revenue growth against a year earlier rose every quarter, from 10.4% in fiscal Q4 2025 to 27.7% in fiscal Q3 2026. Operating income grew faster than revenue, lifting operating margin to 47.6% in fiscal Q3 2026 from 36.9% a year earlier. Management said on the October 21 call that higher revenue was the largest reason for the gain in gross margin, with some help from pricing and from product and end market mix.
Demand came from more than one market. Management said industrial sales in fiscal Q3 2026 rose more than 40% from a year earlier, and Analog, the company’s largest segment, grew 32%. Data center sales rose about 95%. That business accounted for about 13% of third-quarter revenue.
Did Texas Instruments’ Earnings Keep Pace With Its Shares?
No. Earnings per share over twelve months rose from $5.47 in the year to September 2025 to $7.71 in the year to September 2026. That gain of about 41% trailed the share price. Measured on matching dates, the price-to-earnings ratio rose from 33.1 at the end of September 2025 to 36.0 at the end of September 2026, so investors now pay more for each dollar of profit. The stock traded at 38.6 times twelve-month earnings at the November 10 close, against 22.3 for the S&P 500.
Texas Instruments now pays its dividend out of free cash flow. Over the four quarters to September 2026, the company generated $7.32 billion in free cash flow, covering the $5.17 billion paid in dividends. A year earlier, free cash flow of $2.08 billion fell well short of the $4.95 billion the company paid out.
Has Texas Instruments’ Profit Regained Its September 2022 Level?
Not yet. Twelve-month operating income was $8.54 billion in the year to September 2026, still below the $10.7 billion of the year to September 2022. Sales have caught up. Twelve-month revenue of $20.8 billion came in just above that earlier year’s $20.2 billion. On the October 21 call, management said industrial revenue only reached its third-quarter 2022 level in fiscal Q3 2026.
Investors paid 12.3 times sales for the stock at the end of September 2026, compared with 7.0 at the end of September 2022, when operating income was higher. With profit not yet back at its 2022 level, the stock price appears to assume the recovery goes further.
So the market has priced Texas Instruments for a recovery that has reached its sales but not yet its 2022 profit. Fourth-quarter revenue, which management guided at $5.8 billion to $6.3 billion, is the measure to watch when Texas Instruments reports in January 2027.
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