Texas Instruments Incorporated
TXN · Nasdaq
Next quarter
Expected to report Jan 26, 2027 — estimated from last year’s reporting date.
Consensus is $2.61 EPS for Dec 2026 across 9 estimates, ranging $2.47 to $2.66.
TXN Sep 2026
- 9.17%
- -1.81%
- $2.40
- $2.62
- —
- $6.05B
Reported results
- $6.05B
- 64.19%
- $2.87B
- 47.46%
- $2.42B
- $2.62
Highlights
- EPS beat: Diluted EPS of $2.62 exceeded the $2.40 consensus by 9.17%; it included a 1-cent reduction not reflected in TI’s original guidance.
- Broad-based rebound: Revenue of $6.055 billion rose 11% sequentially and 28% year over year, with growth across all end markets and regions and particular strength in industrial, automotive and data center.
- Sequential earnings growth: Operating income of $2.874 billion rose from $2.31 billion in Q2 FY2026, while net income increased from $1.98 billion and EPS from $2.14.
- Higher profitability: Gross margin expanded to 64.2% from 57.4% a year earlier, and operating margin rose to 47.5% from 35.1%; operating profit increased 73% year over year.
- Analog led: Analog revenue grew 32% year over year to $4.911 billion, while Embedded Processing revenue rose 21% to $858 million; Other revenue declined 6% to $286 million.
- Cash generation improved: Trailing-12-month operating cash flow was $9.896 billion and free cash flow was $8.422 billion, versus $6.897 billion and $2.415 billion, respectively, a year earlier. FCF includes $1.104 billion of CHIPS Act incentives.
- Capital returns: TI returned $5.810 billion over the trailing 12 months, including $5.174 billion in dividends and $636 million in repurchases. It announced a 7% quarterly dividend increase to $1.52 per share.
- Q4 outlook: TI expects revenue of $5.80 billion to $6.30 billion and EPS of $2.45 to $2.79.
Analysis
Texas Instruments delivered a sharp sequential and year-over-year improvement in Q3 FY2026. Revenue of $6.055 billion rose 11% from Q2’s $5.46 billion and 28% from $4.742 billion a year ago. EPS of $2.62 was 9.17% above the $2.40 consensus, despite a 1-cent reduction that was not in the company’s original guidance. Net income reached $2.425 billion, up from $1.98 billion last quarter and $1.364 billion a year earlier; operating income climbed to $2.874 billion from $2.31 billion and $1.663 billion, respectively.
The print was defined by a broad demand recovery, especially in Analog, and strong operating leverage as higher factory utilization lifted margins. Analog revenue grew 32% year over year and Embedded Processing grew 21%; gross margin expanded to 64.2% from 57.4%, and operating margin to 47.5% from 35.1%. Cash generation also strengthened: trailing-12-month free cash flow reached $8.422 billion, up from $2.415 billion, though the current figure includes $1.104 billion of CHIPS Act incentives and reflects lower capital spending. TI returned $5.810 billion to shareholders over the trailing 12 months. For Q4, it guided to revenue of $5.80 billion to $6.30 billion and EPS of $2.45 to $2.79.
Broad demand recovery
- Revenue: Q3 sales were $6.055 billion, up 11% sequentially from $5.46 billion and 28% year over year from $4.742 billion. Management reported growth across all end markets and regions, highlighting industrial, automotive and data center.
- Sequential trajectory: Revenue has risen from $4.83 billion in Q1 FY2026 to $5.46 billion in Q2 and $6.055 billion in Q3, alongside increases in EPS from $1.68 to $2.14 and $2.62.
- Market context: TI described the improvement as a combination of continuing secular growth in semiconductor content and a strong cyclical recovery, with the company working to ramp factories to meet higher demand.
Analog and embedded
- Analog: Revenue increased 32% year over year to $4.911 billion, and operating profit rose 69% to $2.505 billion. Growth in both product lines was led by Signal Chain, which management attributed to higher demand.
- Embedded Processing: Revenue grew 21% to $858 million, while operating profit more than doubled to $227 million. Higher revenue and associated gross profit drove the improvement.
- Other: Revenue declined 6% to $286 million, while operating profit increased to $142 million from $69 million. The year-ago period included $85 million of restructuring charges; Q3 2026 included $7 million of acquisition charges.
Margin expansion
- Gross profit: Gross profit rose 43% year over year to $3.887 billion, outpacing 28% revenue growth. Gross margin increased to 64.2% from 57.4%.
- Operating leverage: Operating profit increased 73% to $2.874 billion, and operating margin expanded to 47.5% from 35.1%. R&D and SG&A together were $1.006 billion, compared with $975 million a year earlier.
- Manufacturing utilization: TI attributed the profit increase primarily to higher revenue and associated gross profit. With a significant portion of manufacturing costs fixed, higher factory loadings help spread those costs over greater output; the company also noted that capacity expansions can carry higher manufacturing costs.
Cash and shareholder returns
- Trailing-12-month cash flow: Operating cash flow was $9.896 billion, up 43% from $6.897 billion, and free cash flow was $8.422 billion, versus $2.415 billion a year earlier. FCF is a non-GAAP measure defined as operating cash flow less capital expenditures plus CHIPS Act incentive proceeds.
- FCF drivers: The trailing-12-month calculation includes $1.104 billion of CHIPS Act incentives and $2.578 billion of capital expenditures, compared with $335 million and $4.817 billion, respectively, in the year-ago period.
- Returns: TI returned $5.810 billion over the trailing 12 months, including $5.174 billion in dividends and $636 million in share repurchases. In September, it announced a 7% increase in the quarterly dividend to $1.52 per share, its 23rd consecutive year of increases.
- Investment: TI spent $4.0 billion on R&D and SG&A and $2.6 billion on capital expenditures over the trailing 12 months. It expects 2026 capital expenditures of $2 billion to $3 billion.
Q4 outlook
- Guidance: TI expects Q4 revenue of $5.80 billion to $6.30 billion and EPS of $2.45 to $2.79. The revenue range brackets Q3’s $6.055 billion result, while the EPS range brackets Q3’s $2.62.
- Acquisition: TI agreed to acquire Silicon Labs for $231 per share in cash, at an enterprise value of approximately $7.5 billion. Closing is expected in the first half of 2027, subject to regulatory approval and customary conditions.
- Funding: TI expects to use cash on hand and debt financing for the acquisition. Its delayed-draw term loan facility provides for up to $5 billion and had no borrowings outstanding at quarter-end.
