Texas Instruments Incorporated
TXN · Nasdaq
Next quarter
Expected to report Oct 20, 2026 — estimated from last year’s reporting date.
Consensus is $2.39 EPS for Sep 2026 across 8 estimates, ranging $2.23 to $2.43.
TXN Jun 2026
- 12.04%
- -3.13%
- $1.91
- $2.14
- —
- $5.46B
Reported results
- $5.46B
- 61.36%
- $2.31B
- 42.28%
- $1.98B
- $2.14
Highlights
- Earnings beat: Q2 revenue was $5.46 billion and diluted EPS was $2.14, versus consensus EPS of $1.91; EPS included a 5-cent benefit not in the original guidance.
- Broad-based recovery: Revenue increased 13% sequentially and 23% year over year, led by industrial, data center and automotive demand.
- Profit acceleration: Operating profit rose 48% year over year to $2.31 billion, with operating margin expanding to 42.3% from 35.1%; net income increased 53% to $1.98 billion.
- Analog led the print: Analog revenue grew 26% year over year to $4.37 billion and operating profit rose 50% to $1.99 billion, while Embedded Processing revenue increased 16% to $788 million.
- Cash generation strengthened: Trailing-12-month operating cash flow was $8.67 billion and free cash flow was $6.53 billion, equal to 33.6% of revenue and up from 10.6% a year earlier.
- Capital allocation: Over the trailing 12 months, TI invested $3.9 billion in R&D and SG&A, spent $3.3 billion on capital expenditures and returned $5.8 billion to shareholders, primarily through dividends.
- Silicon Labs transaction: TI recorded $17 million of acquisition charges in Q2 and arranged a $5 billion delayed-draw term loan facility to support the planned $7.5 billion acquisition, expected to close in the first half of 2027.
- Third-quarter outlook: TI expects Q3 revenue of $5.65 billion to $6.15 billion and EPS of $2.23 to $2.57, implying midpoint sequential growth of about 8% for revenue and 12% for EPS.
Analysis
Texas Instruments delivered a materially stronger-than-expected second quarter. Diluted EPS of $2.14 exceeded the $1.91 consensus by 23 cents, or 12%, even though the result included a 5-cent benefit absent from its original guidance. Revenue of $5.46 billion rose 13% from Q1's $4.83 billion and 23% from Q2 2025's $4.45 billion. Operating profit increased 28% sequentially and 48% year over year to $2.31 billion, while net income rose 29% sequentially and 53% year over year to $1.98 billion.
The print was defined first by a broad demand recovery, with industrial, data center and automotive leading growth, and second by Analog's outsized contribution. Analog revenue rose 26% year over year and operating profit increased 50%, while Embedded Processing also improved, with revenue up 16% and operating profit nearly doubling to $168 million. Higher factory utilization and revenue lifted gross margin to 61.4% from 57.9% a year ago. Cash generation was another defining feature: trailing-12-month free cash flow reached $6.53 billion, although the measure includes $1.18 billion of CHIPS Act proceeds. TI also advanced its planned $7.5 billion Silicon Labs acquisition. Q3 guidance calls for further growth, with revenue of $5.65 billion to $6.15 billion and EPS of $2.23 to $2.57.
Revenue and margins
TI's second-quarter recovery extended beyond the prior quarter's improvement. Revenue rose to $5.46 billion from $4.83 billion in Q1 and $4.45 billion a year earlier. Gross profit increased 30% year over year to $3.35 billion, despite higher manufacturing costs tied to capacity expansion. Gross margin improved to 61.4% from 57.9%, while operating expenses were broadly stable at $1.03 billion versus $1.01 billion a year ago. The resulting operating margin was 42.3%, up from 35.1%.
- Net income was $1.98 billion, up from $1.54 billion in Q1 and $1.30 billion in Q2 2025.
- Diluted EPS was $2.14, versus $1.68 in Q1 and $1.41 a year earlier.
- The effective tax rate was 12% in both the current and year-ago quarters; Q2 included $51 million of discrete tax benefits.
Analog-led demand recovery
The strongest evidence of a cyclical upturn was in Analog, which accounts for roughly 80% of quarterly revenue. Management attributed broad revenue growth to higher demand, led by industrial, data center and automotive applications. Signal Chain led growth within Analog, and both Analog product lines contributed.
- Analog revenue increased 26% year over year to $4.37 billion, and operating profit rose 50% to $1.99 billion.
- Analog operating margin expanded to 45.6% from 38.4%, reflecting higher revenue and associated gross profit.
- Embedded Processing revenue grew 16% to $788 million; operating profit increased 98% to $168 million and margin rose to 21.3% from 12.5%, helped by higher revenue and the ongoing ramp of LFAB.
- Other revenue declined 2% to $310 million, while operating profit fell 2% to $150 million, including acquisition charges.
Cash flow and investment
TI's cash profile improved sharply as earnings recovered and capital spending moderated. Trailing-12-month operating cash flow rose 35% year over year to $8.67 billion, while reported free cash flow increased 271% to $6.53 billion. TI defines free cash flow as operating cash flow less capital expenditures plus CHIPS Act proceeds, so the figure includes $1.18 billion of incentives over the period.
- Trailing-12-month free cash flow margin was 33.6%, versus 10.6% a year earlier; operating cash flow margin was 44.6%.
- First-half capital expenditures were $1.19 billion, down from $2.43 billion in the year-ago period; TI expects full-year 2026 capital expenditures of $2 billion to $3 billion.
- First-half operating cash flow was $4.22 billion, including a $301 million CHIPS Act investment tax credit benefit, while CHIPS Act cash proceeds were $1.10 billion.
- Cash and short-term investments totaled $7.00 billion at June 30, up $2.12 billion from year-end 2025. Inventory declined to $4.61 billion from $4.80 billion, reducing days of inventory to 196 from 222.
Silicon Labs acquisition
The planned Silicon Labs acquisition remains a significant capital-allocation item alongside the operating recovery. TI agreed to acquire Silicon Labs for $231 per share in cash, representing approximately $7.5 billion of enterprise value. Closing is expected in the first half of 2027, subject to regulatory approval and other conditions.
- TI recognized $17 million of acquisition charges in Q2 and $34 million in the first half of 2026.
- The company entered into a 364-day delayed-draw term loan facility for up to $5 billion; there were no borrowings under the facility at June 30.
- TI expects to fund the transaction with a combination of cash on hand and debt financing.
- Trailing-12-month shareholder returns were $5.8 billion, while Q2 dividends paid were $1.30 billion and stock repurchases were only $27 million.
Third-quarter outlook
TI expects the recovery to continue into Q3, though the guidance range is wide. Revenue is projected at $5.65 billion to $6.15 billion, with EPS of $2.23 to $2.57. At the midpoint, revenue would be approximately 8% above Q2 and EPS about 12% higher. The outlook therefore points to another sequential step-up after the 13% revenue increase delivered in Q2.
- The Q3 revenue midpoint is $5.90 billion, while the EPS midpoint is $2.40.
- The Q2 EPS result included a 5-cent benefit that was not included in the company's original guidance, making the reported beat partly nonrecurring.
- TI ended the quarter with $14.05 billion of debt, an undrawn $1 billion revolving credit facility and no commercial paper outstanding.
