Value
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.4 |
| P/S | 0.0 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 3.7 |
| PEG | 5.2 |
| Analyst target | 3.0 |
- ▸Forward P/E: 31.7x
- ▸PEG: 1.45
- ▸Expensive valuation
TXN · Why this verdict
Why Texas Instruments (TXN) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Texas Instruments is a high-quality analog semiconductor compounder with 32% return on equity, a wide economic moat, four consecutive earnings beats, and strong volume accumulation, but trades at a premium forward P/E of 33x while concentration in analog semiconductors shipped into China creates geopolitical risk.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Texas Instruments has beaten analyst estimates in each of the last four quarters with an average surprise of 8.97%, most recently delivering $1.71 against a $1.37 estimate, and revenue is growing with earnings growth of 8.3% year over year. Earnings | The beat streak extends to at least 6 consecutive quarters and earnings per share grows by more than 10% year over year in the next annual period. | →Stable |
| CounterThe most recent beat of 24.4% is unusually large for a mega-cap semiconductor company and may reflect inventory restocking that pulls forward demand from future quarters. | ||
Approximately 50% of revenue is shipped into China, among the highest China exposure in the batch, and the analog segment generating 79% of total revenue is the primary channel for this exposure, creating a scenario where export controls, tariffs, or trade restrictions could affect half the revenue base. Bear case | Non-China revenue grows faster than China revenue, reducing the China share to below 40% of total over the next 2 years. | →Stable |
| CounterAnalog semiconductors with decades-long design-win cycles are difficult to substitute; Chinese OEM customers cannot easily switch away from TI-designed components in existing products without re-certification. | ||
Texas Instruments earns a 32% return on equity with 29% net margins, a wide economic moat designation, and a Piotroski score of 8 out of 9, reflecting decades of competitive positioning in the analog semiconductor market where switching costs and application-specific design wins create durable earnings power. Quality breakdown | Return on equity remains above 25% over the next 12 months, confirming that the moat is sustaining its premium returns through the cyclical upturn. | →Stable |
| CounterFree cash flow is only 20% of net income, which is a significant red flag for a company claiming a quality moat, and the low conversion rate suggests the business requires heavy ongoing capital investment to maintain its position. | ||
At $313.34 with a forward P/E of 33.3x and a PEG of 1.50, the stock is already 14.4% above analyst consensus price targets, trading at a premium to its own history and requiring continued earnings acceleration to sustain the current valuation. Warnings | Analyst price targets are revised upward to at least $350, restoring a positive reward-to-risk ratio above 1.5 at the current price. | →Stable |
| CounterPremium valuations for wide-moat analog semiconductor leaders are historically justified by the durability of earnings, and the strong beat streak suggests analysts remain too conservative. | ||
Texas Instruments has beaten analyst estimates in each of the last four quarters with an average surprise of 8.97%, most recently delivering $1.71 against a $1.37 estimate, and revenue is growing with earnings growth of 8.3% year over year.
→StableEarnings
- Expectation
- The beat streak extends to at least 6 consecutive quarters and earnings per share grows by more than 10% year over year in the next annual period.
CounterThe most recent beat of 24.4% is unusually large for a mega-cap semiconductor company and may reflect inventory restocking that pulls forward demand from future quarters.
Approximately 50% of revenue is shipped into China, among the highest China exposure in the batch, and the analog segment generating 79% of total revenue is the primary channel for this exposure, creating a scenario where export controls, tariffs, or trade restrictions could affect half the revenue base.
→StableBear case
- Expectation
- Non-China revenue grows faster than China revenue, reducing the China share to below 40% of total over the next 2 years.
CounterAnalog semiconductors with decades-long design-win cycles are difficult to substitute; Chinese OEM customers cannot easily switch away from TI-designed components in existing products without re-certification.
Texas Instruments earns a 32% return on equity with 29% net margins, a wide economic moat designation, and a Piotroski score of 8 out of 9, reflecting decades of competitive positioning in the analog semiconductor market where switching costs and application-specific design wins create durable earnings power.
→StableQuality breakdown
- Expectation
- Return on equity remains above 25% over the next 12 months, confirming that the moat is sustaining its premium returns through the cyclical upturn.
CounterFree cash flow is only 20% of net income, which is a significant red flag for a company claiming a quality moat, and the low conversion rate suggests the business requires heavy ongoing capital investment to maintain its position.
At $313.34 with a forward P/E of 33.3x and a PEG of 1.50, the stock is already 14.4% above analyst consensus price targets, trading at a premium to its own history and requiring continued earnings acceleration to sustain the current valuation.
→StableWarnings
- Expectation
- Analyst price targets are revised upward to at least $350, restoring a positive reward-to-risk ratio above 1.5 at the current price.
CounterPremium valuations for wide-moat analog semiconductor leaders are historically justified by the durability of earnings, and the strong beat streak suggests analysts remain too conservative.
Per-dimension breakdown
Quality
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 8.1 |
| Gross margin | 7.5 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 8.5 |
| FCF quality | 1.6 |
| Moat | 7.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 32%
- ▸Strong margins: 29%
- ▸Earnings quality RED FLAG: 20% FCF/NI
- ▸Wide economic moat
Growth
7.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 7.2 |
| EPS growth | 8.3 |
Momentum
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.6 |
| Analyst rating | 7.5 |
| Price target | 4.2 |
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $75,052,405 (0.027% of mkt cap)
Peer rank
4.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.9 |
| quality rank | 8.3 |
| growth rank | 4.1 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.7 |
| support resistance | 4.0 |
| 52w position | 8.6 |
| gap | 4.0 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.8 |
| days to cover | 8.4 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 2.7 |
| max pain risk | 3.0 |
| beta | 5.8 |
| debt equity | 6.0 |
- ▸High IV: 64%
- ▸Above max pain $145
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 6.4 |
| dividend safety | 3.5 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Growth is cheap relative to earnings, but the technical setup has not yet produced a breakout above resistance (PEG 1.45, quality 8.0/10, growth 7.8/10).
Engine technical detail
verdict_path:
L4:PATH_C2_GARP_WAITPassed (5)
- INSIDER:OK
- NEWS_BOOST:ANALYST:0.70
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.1<4.5
- ASYMMETRY:-1.1=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.08
Upside
-12.6%
Downside
11.7%
Sizing output
STARTER
SetupRANGE_BOUND — RSI 52 mid-range, Bollinger mid-band
EdgeTEMP_HEADWIND — High quality (8.0) with weak momentum (3.1)
SuitabilityAGGRESSIVE — Beta 1.31>1.3
Investment implication
The C-path quality+growth combination triggered the STRONG_BUY_WAIT verdict: quality 8.0 and growth 7.8 both clear their thresholds, with asymmetric R:R of -1.08 supporting the read.
The strongest dimensions are Quality at 8.0, Growth at 7.8, and Catalyst at 5.9; the weakest are Value at 2.7, Momentum at 3.1, and Insider at 3.9. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -1.08 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Texas Instruments earns a 32% return on equity with 29% net margins, a wide economic moat designation, and a Piotroski score of 8 out of 9, reflecting decades of competitive positioning in the analog semiconductor market where switching costs and application-specific design wins create durable earnings power.
Trip ifReturn on equity falls below 20% for at least 2 consecutive quarters.
- P2Texas Instruments has beaten analyst estimates in each of the last four quarters with an average surprise of 8.97%, most recently delivering $1.71 against a $1.37 estimate, and revenue is growing with earnings growth of 8.3% year over year.
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters.
- P3Approximately 50% of revenue is shipped into China, among the highest China exposure in the batch, and the analog segment generating 79% of total revenue is the primary channel for this exposure, creating a scenario where export controls, tariffs, or trade restrictions could affect half the revenue base.
Trip ifChina-directed revenue falls below 35% of total as a result of export restrictions affecting more than 20% of the current product portfolio.
- P4At $313.34 with a forward P/E of 33.3x and a PEG of 1.50, the stock is already 14.4% above analyst consensus price targets, trading at a premium to its own history and requiring continued earnings acceleration to sustain the current valuation.
Trip ifStock price drops below $280, more than 10% below the current $313.34, on downward analyst target revisions or earnings guidance cuts.