QS Research · Michael Burry's Scion Capital analyst template · 2006
TEXAS INSTRUMENTS INC (TXN)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -21% · downside -58% · upside +12%
The market is treating TTM/up-cycle EBITDA and CHIPS-boosted FCF as the new mid-cycle, but on FY2020-FY2025 normalized EBITDA of $8.47B, 24.0x EV/EBITDA (N27) gives $203B EV; less $6.07B net debt gives $197B equity, or about $216/share, -21% from $272.62. The same base at NXPI's 12.9x gives about $113/share (-58%), while at ADI's 33.6x it gives about $305/share (+12%). Only TTM EBITDA of $10.64B (N14) at 24.0x roughly supports today's price, so the call hinges on whether $10B+ EBITDA is durable rather than cyclical. The 300mm cost position and cash generation are real, but the normalized risk/reward is skewed down without meeting the short rule, making this a watch.
Key numbers
- Share price: $272.62
- Market cap: $249.11B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $20.77B
- EV / EBITDA (TTM): 24.0x
- P/E (TTM): 35.2x
- Price / book: 12.98x
The 15 boxes
- ✓ 1. Long-form business notes
TI sells analog and embedded chips — Analog was $14.01B of $17.68B FY2025 revenue (about 79%) and Embedded Processing $2.70B (about 15%) — through a mostly direct channel to over 100,000 customers, with Industrial and Automotive each about 33% of FY2025 revenue. Revenue ran $14.46B in FY2020, peaked at $20.03B in FY2022, fell to $15.64B in FY2024 and recovered to $17.68B in FY2025, while operating income went $10.14B (FY2022) to $5.46B (FY2024) to $6.02B (FY2025). The business has shifted toward 300mm in-house manufacturing (Richardson, Sherman, Lehi ramping in 2025) with a six-year elevated capex cycle described as near completion, and D&A has risen from $733.0M (FY2020) to $1.92B (FY2025). Cash generation has stayed ahead of reported earnings: operating cash flow $7.15B against net income $4.97B in FY2025.
- ✓ 2. Competitive advantage
TXN's sources support a durable but cyclical advantage in in-house manufacturing scale and 300mm cost, reinforced by a direct channel and a very broad customer base; analog and embedded markets remain fragmented and pricing competitive. FY2022 peak gross profit was $13.77B with $10.14B operating income, falling to $9.09B/$5.46B in FY2024 and recovering to $10.08B/$6.02B in FY2025, so margins are high but cycle-sensitive. Embedded software lock-in is a stated competitive factor, but no source names brand or licences as the moat, and no TTM data is provided.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended Sep 30, 2026) revenue was $6.06B, up 11% sequentially and 28% y/y, with gross margin 64.2% and operating margin 47.5%. TTM to Sep 30, 2026 CFO was $9.896B and FCF $8.422B, helped by CHIPS Act ITC cash benefits; inventory fell to $4.67B and days of inventory to 194. Capital returns continued but buybacks slowed to $233M in first nine months 2026 while the dividend rose 7% to $1.52/quarter; the 10-Q gives capex outlook of $2B-$3B for 2026 and the pending ~$7.5B Silicon Labs deal, but no Q4 revenue/EPS guidance.
- ✓ 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
- ○ 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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