QS Research · Michael Burry's Scion Capital analyst template · 2006
TEXAS INSTRUMENTS INC (TXN)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction medium · base case -21% · downside -59% · upside +8%
The market is not missing the upturn; it is capitalizing TXN's TTM peak revenue and CHIPS-flattered free cash flow as if they were the new base. On normalized FY2020-FY2025 EBITDA of $8.47B at TXN's own 24.4x EV/EBITDA, the stock is worth about $219.5, 21% below the $277.36 close. TTM EBITDA is $10.64B and TTM FCF is $7.32B, but normalized FCF is $3.86B, below TTM dividends of $5.17B. The upside case at ADI's 26.3x is only $299.6 (+8%), while a trough multiple like NXPI's 13.1x gives $114.8 (-59%). That asymmetry argues against owning, but the short rule is not met because the base case is -21%, not -30% or lower; watch.
Key numbers
- Share price: $277.36
- Market cap: $253.44B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $20.77B
- EV / EBITDA (TTM): 24.4x
- P/E (TTM): 35.8x
- Price / book: 13.21x
The 15 boxes
- ✓ 1. Long-form business notes
TXN designs and manufactures analog and embedded processing semiconductors, sold to more than 100,000 customers, and reports Analog, Embedded Processing and Other. FY2025 revenue was $17.68B, with Analog $14.01B (about 79%), Embedded Processing $2.70B (about 15%) and Other $979M. Versus FY2020 revenue of $14.46B, Analog grew as a share from about 75% while Embedded fell from about 18%; the market mix shifted toward automotive and a new data center category, and direct channel reached more than 80% of FY2025 revenue. The FY2020-FY2025 data show a clear cycle: revenue and operating income peaked in FY2022, troughed in FY2024, and recovered partly in FY2025.
- ✓ 2. Competitive advantage
The sources support a real but not absolute moat: in-house 300mm manufacturing (~40% lower unpackaged cost) and a direct channel (>80% of 2025 revenue) plus a diversified >100,000-customer base. But the 10-K describes fragmented analog/embedded markets with dozens of competitors, and margin history is cyclical: operating income fell from $10.14B in FY2022 to $5.46B in FY2024 before $6.02B in FY2025. Fixed manufacturing costs and rising depreciation amplify the cycle. No TTM data are in the supplied sources, so TTM cannot be shown beside the cycle.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended Sep 30, 2026) was a strong cyclical upturn quarter: revenue $6.06 billion, +11% sequentially and +28% year over year, with gross margin 64.2% (vs 57.4% in Q3 2025) and operating profit $2.87 billion, or 47.5% of revenue. Free cash flow was $2.96 billion in the quarter and $8.4 billion on a trailing-12-month basis (40.6% of TTM revenue of $20.77 billion). Inventory fell $132 million from year-end 2025 while days of inventory dropped to 194 from 222; total cash rose $3.26 billion to $8.14 billion. Q4 2026 guidance from the earnings release is revenue of $5.80-6.30 billion and EPS of $2.45-2.79, i.e. a sequential step down.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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