SSG

The Estimates

Consensus looks for revenue of $5.934 billion, up 25% year on year, and EPS of $2.43, up about 64%. Gross margin is expected at 61.9%. Texas Instruments (TXN.US) reports results for the third quarter of fiscal 2026 (FY2026) after the US close on 22 October. July guidance set revenue at $5.65 billion to $6.15 billion. The Street's number sits in the upper half of that range, above the $5.9 billion midpoint.

Track Record

Growth has accelerated for three straight quarters. Revenue climbed from $4.069 billion in the first quarter of FY2025 to $5.463 billion in the second quarter of FY2026. Year-on-year gains over those six quarters ran 1.5%, 9.3%, 6.6%, -6.7%, 9.1% and 13.2%. Margins repaired alongside: gross margin from 56.8% to 61.4%, net margin from 29.0% to 36.2%. Analog chips account for about 80% of revenue.

What to Watch

Pricing is the first test. The company gave customers notice of a third round of price increases this year on 1 September, after rounds in March and May. The number to watch is gross margin: 61.9% consensus would mark a step up from 61.4%. Second, channel inventory. UBS said on 19 October that distributor stock fell 7% sequentially and prices rose 9% to 12%, and named TI its top analog pick. Third, power supply for AI data centres. Morgan Stanley argued on 12 October that worries about a delayed 800V architecture are overstated, because the technical route has not changed; clearer progress may surface at the OCP summit. Fourth, capital spending. Consensus sees about $680 million of outlay and $2.87 billion of operating cash flow. US expansion is still squeezing near-term cash, and early October analysis flagged that spending as a valuation drag.

Analyst Ratings

The split on the Street comes down to how long AI demand lasts and what the multiple deserves. UBS added the stock to its high-conviction list of technology, media and telecom (TMT) names in mid-September, with a $380 target roughly 30% above the current $284.65. StoneX repeated buy on 20 October with a $360 target. On the cautious side, Bernstein kept hold at $290 on 22 September. Wells Fargo cut its target to $300 on 20 October, and Goldman Sachs sat at $225 in early October.

In Short

The shares are up about 60% this year and trade near 14x book, on book value of $19.72 per share at the end of the second quarter. Recovery is already in the price. Whether the price increases stick, the range of fourth-quarter guidance and how management frames capital spending will move the stock more than this quarter's numbers.