Texas Instruments Could Emerge as an AI Chip Winner
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy TXN?
Source: Fool
- Market Potential: Texas Instruments' analog chips play a crucial role in power management within data centers, and with the initial buildout of AI infrastructure, significant growth is expected in the coming years, positioning the company as a key player in the AI market.
- Investment Expansion: Texas Instruments has been actively investing in new chip production capacity and recently acquired competitor Silicon Labs, indicating the company's preparedness for future growth and enhanced market competitiveness.
- Sales Reporting Adjustment: In Q4 2025, the company will report its data center business separately, which, despite accounting for only 9% of total revenue, grew 64% year-over-year, showcasing strong market demand and growth potential.
- Industry Leadership: While other analog chipmakers exist, Texas Instruments, with its industry-leading position and ongoing growth efforts, is expected to become a top chip manufacturer by 2027, particularly driven by the AI buildout.
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Analyst Views on TXN
Wall Street analysts forecast TXN stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for TXN is 193.53 USD with a low forecast of 125.00 USD and a high forecast of 245.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
20 Analyst Rating
10 Buy
5 Hold
5 Sell
Hold
Current: 223.980
Low
125.00
Averages
193.53
High
245.00
Current: 223.980
Low
125.00
Averages
193.53
High
245.00
About TXN
Texas Instruments Incorporated is a global semiconductor company that designs, manufactures, tests, and sells analog and embedded processing chips for markets, such as industrial, automotive, personal electronics, communications equipment, and enterprise systems. Its Analog segment includes product lines, such as Power and Signal Chain. Power includes products that help customers manage power in electronic systems. Its portfolio is designed to manage power requirements across different voltage levels, including battery-management solutions, DC/DC switching regulators, AC/DC and isolated DC/DC switching regulators, power switches, linear and low-dropout regulators, voltage references, and others. Signal Chain includes products that sense, condition, and measure real-world signals to allow information to be transferred or converted for further processing and control. The Embedded Processing segment includes microcontrollers, digital signal processors (DSPs) and applications processors.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Texas Instruments Could Emerge as an AI Chip Winner
- Market Potential: Texas Instruments' analog chips play a crucial role in power management within data centers, and with the initial buildout of AI infrastructure, significant growth is expected in the coming years, positioning the company as a key player in the AI market.
- Investment Expansion: Texas Instruments has been actively investing in new chip production capacity and recently acquired competitor Silicon Labs, indicating the company's preparedness for future growth and enhanced market competitiveness.
- Sales Reporting Adjustment: In Q4 2025, the company will report its data center business separately, which, despite accounting for only 9% of total revenue, grew 64% year-over-year, showcasing strong market demand and growth potential.
- Industry Leadership: While other analog chipmakers exist, Texas Instruments, with its industry-leading position and ongoing growth efforts, is expected to become a top chip manufacturer by 2027, particularly driven by the AI buildout.
See More
Texas Instruments' Potential in the AI Wave
- Growing Market Demand: As the AI infrastructure builds out, Texas Instruments' analog chips play a crucial role in power management within data centers, with significant growth expected in the coming years, particularly as the AI market is still in its infancy.
- Investment Expansion: Texas Instruments' recent acquisition of Silicon Labs indicates its intent to invest in new chip production capacity, preparing the company for future market demands and driving long-term growth.
- Sales Reporting Adjustment: In Q4 2025, the company broke out its data center business, which, despite accounting for only 9% of total revenue, grew 64% year-over-year, highlighting its potential in the AI sector and possibly fueling a recovery in the analog chip industry.
- Long-Term Success Outlook: While there are other more exciting chipmakers in the market, Texas Instruments, with its industry-leading position and growth initiatives, is expected to become a top chip manufacturer by 2027, especially driven by the AI buildout.
See More
Zscaler Acquires SquareX to Enhance Security Capabilities
- Acquisition Enhances Security: Zscaler's acquisition of SquareX aims to bolster its zero trust security capabilities, allowing organizations to deploy lightweight browser extensions directly within standard browsers, thus eliminating the need for third-party enterprise browsers or full security agents, enhancing its competitive edge in the AI era.
- Major Deal Completion: Heidelberg Materials has agreed to acquire Maas Group's construction materials business in Australia for up to A$1.7 billion (approximately $1.19 billion), including a potential A$120 million cash payment linked to further post-completion milestones, thereby strengthening its position in the Australian market.
- Private Equity Acquisition: KKR has agreed to acquire private investment firm Arctos Partners in a transaction valued at $1.4 billion in initial consideration, plus potential additional equity of up to $550 million, which will enhance KKR's investment portfolio in the private equity market.
- Cash Transaction Acquisition: Texas Instruments has signed a definitive agreement to acquire Silicon Labs for $231.00 per share in an all-cash transaction, representing a total enterprise value of around $7.5 billion, which will further expand Texas Instruments' market share in the semiconductor industry.
See More
Traditional Companies Emerge in AI Wave
- Data Center Sales Surge: Texas Instruments reported a 70% increase in sales within the data center segment in 2025, indicating a rapid expansion in data center construction that boosts demand for its analog chips, thereby enhancing its competitive position in the AI market.
- Importance of Power Management: Texas Instruments' analog chips convert real-world signals into digital signals and manage power, ensuring reliable operation of data centers, which highlights their critical role in AI infrastructure.
- Hydrogen Solutions Advantage: Bloom Energy offers hydrogen power cells and electrolyzers that can deliver power to data centers faster than traditional electric utilities can build infrastructure, having already signed agreements with American Electric Power and Brookfield Asset Management to expand its sales channels in the AI sector.
- Attractiveness of Renewable Energy: Brookfield Renewable, a globally diversified clean energy company, collaborates with clients like Microsoft and Google to provide electricity, and its 5.2% dividend yield appeals to many investors, indicating potential growth in the AI industry.
See More
Texas Instruments Announces $7.5B Acquisition and Shift in AI Strategy
Strategic Acquisition: Texas Instruments has announced a $7.5 billion acquisition of Silicon Labs, marking a significant shift in its corporate strategy to enhance manufacturing capabilities and capitalize on the growing demand for artificial intelligence infrastructure.
Financial Performance: The company reported a revenue of $4.42 billion for Q4 2025, reflecting a 10% year-over-year increase, although earnings per share slightly missed estimates. Despite this, Texas Instruments shares have shown resilience, trading near their 52-week high.
Growth in Data Centers: Texas Instruments is experiencing explosive growth in its data center segment, which has seen a 70% year-over-year revenue increase, driven by the global demand for artificial intelligence infrastructure.
Future Outlook: Management projects revenue for Q1 2026 to be between $4.32 billion and $4.68 billion, indicating a stabilization in the industrial sector and a positive outlook for continued cash flow growth and dividend increases.
See More
Analysts Predict AI Infrastructure Spending to Surge
- Eaton's Positive Outlook: Eaton's backlog is expected to grow by 34% over 2024, indicating strong demand from data center clients, and while the company plans to spin off its vehicle division to enhance profitability and growth potential, it will maintain its leadership in power control.
- Texas Instruments' New Business Growth: Texas Instruments has just categorized data center sales as a new business segment, with a 64% increase in 2025, which not only enhances the company's market position but also may help it recover amid broader industry demand lulls.
- Brookfield Renewable's Strategic Partnerships: Brookfield Renewable has secured large deals with Microsoft and Alphabet to support their data center build-outs, positioning itself to benefit from the growing demand for clean energy, with dividend yields of 5.1% and 3.7% providing stable returns for investors.
- Future Growth Potential: As AI infrastructure builds out, Eaton, Texas Instruments, and Brookfield Renewable are all poised to benefit, with Eaton's spin-off plan driving growth, Texas Instruments attracting investors with above-market dividends, and Brookfield appealing to those seeking stable income through its high dividends.
See More
Texas Instruments Could Emerge as an AI Chip Winner
- Market Potential: Texas Instruments' analog chips play a crucial role in power management within data centers, and with the initial buildout of AI infrastructure, significant growth is expected in the coming years, positioning the company as a key player in the AI market.
- Investment Expansion: Texas Instruments has been actively investing in new chip production capacity and recently acquired competitor Silicon Labs, indicating the company's preparedness for future growth and enhanced market competitiveness.
- Sales Reporting Adjustment: In Q4 2025, the company will report its data center business separately, which, despite accounting for only 9% of total revenue, grew 64% year-over-year, showcasing strong market demand and growth potential.
- Industry Leadership: While other analog chipmakers exist, Texas Instruments, with its industry-leading position and ongoing growth efforts, is expected to become a top chip manufacturer by 2027, particularly driven by the AI buildout.
See More
Texas Instruments' Potential in the AI Wave
- Growing Market Demand: As the AI infrastructure builds out, Texas Instruments' analog chips play a crucial role in power management within data centers, with significant growth expected in the coming years, particularly as the AI market is still in its infancy.
- Investment Expansion: Texas Instruments' recent acquisition of Silicon Labs indicates its intent to invest in new chip production capacity, preparing the company for future market demands and driving long-term growth.
- Sales Reporting Adjustment: In Q4 2025, the company broke out its data center business, which, despite accounting for only 9% of total revenue, grew 64% year-over-year, highlighting its potential in the AI sector and possibly fueling a recovery in the analog chip industry.
- Long-Term Success Outlook: While there are other more exciting chipmakers in the market, Texas Instruments, with its industry-leading position and growth initiatives, is expected to become a top chip manufacturer by 2027, especially driven by the AI buildout.
See More
Zscaler Acquires SquareX to Enhance Security Capabilities
- Acquisition Enhances Security: Zscaler's acquisition of SquareX aims to bolster its zero trust security capabilities, allowing organizations to deploy lightweight browser extensions directly within standard browsers, thus eliminating the need for third-party enterprise browsers or full security agents, enhancing its competitive edge in the AI era.
- Major Deal Completion: Heidelberg Materials has agreed to acquire Maas Group's construction materials business in Australia for up to A$1.7 billion (approximately $1.19 billion), including a potential A$120 million cash payment linked to further post-completion milestones, thereby strengthening its position in the Australian market.
- Private Equity Acquisition: KKR has agreed to acquire private investment firm Arctos Partners in a transaction valued at $1.4 billion in initial consideration, plus potential additional equity of up to $550 million, which will enhance KKR's investment portfolio in the private equity market.
- Cash Transaction Acquisition: Texas Instruments has signed a definitive agreement to acquire Silicon Labs for $231.00 per share in an all-cash transaction, representing a total enterprise value of around $7.5 billion, which will further expand Texas Instruments' market share in the semiconductor industry.
See More
Traditional Companies Emerge in AI Wave
- Data Center Sales Surge: Texas Instruments reported a 70% increase in sales within the data center segment in 2025, indicating a rapid expansion in data center construction that boosts demand for its analog chips, thereby enhancing its competitive position in the AI market.
- Importance of Power Management: Texas Instruments' analog chips convert real-world signals into digital signals and manage power, ensuring reliable operation of data centers, which highlights their critical role in AI infrastructure.
- Hydrogen Solutions Advantage: Bloom Energy offers hydrogen power cells and electrolyzers that can deliver power to data centers faster than traditional electric utilities can build infrastructure, having already signed agreements with American Electric Power and Brookfield Asset Management to expand its sales channels in the AI sector.
- Attractiveness of Renewable Energy: Brookfield Renewable, a globally diversified clean energy company, collaborates with clients like Microsoft and Google to provide electricity, and its 5.2% dividend yield appeals to many investors, indicating potential growth in the AI industry.
See More
Texas Instruments Announces $7.5B Acquisition and Shift in AI Strategy
Strategic Acquisition: Texas Instruments has announced a $7.5 billion acquisition of Silicon Labs, marking a significant shift in its corporate strategy to enhance manufacturing capabilities and capitalize on the growing demand for artificial intelligence infrastructure.
Financial Performance: The company reported a revenue of $4.42 billion for Q4 2025, reflecting a 10% year-over-year increase, although earnings per share slightly missed estimates. Despite this, Texas Instruments shares have shown resilience, trading near their 52-week high.
Growth in Data Centers: Texas Instruments is experiencing explosive growth in its data center segment, which has seen a 70% year-over-year revenue increase, driven by the global demand for artificial intelligence infrastructure.
Future Outlook: Management projects revenue for Q1 2026 to be between $4.32 billion and $4.68 billion, indicating a stabilization in the industrial sector and a positive outlook for continued cash flow growth and dividend increases.
See More
Analysts Predict AI Infrastructure Spending to Surge
- Eaton's Positive Outlook: Eaton's backlog is expected to grow by 34% over 2024, indicating strong demand from data center clients, and while the company plans to spin off its vehicle division to enhance profitability and growth potential, it will maintain its leadership in power control.
- Texas Instruments' New Business Growth: Texas Instruments has just categorized data center sales as a new business segment, with a 64% increase in 2025, which not only enhances the company's market position but also may help it recover amid broader industry demand lulls.
- Brookfield Renewable's Strategic Partnerships: Brookfield Renewable has secured large deals with Microsoft and Alphabet to support their data center build-outs, positioning itself to benefit from the growing demand for clean energy, with dividend yields of 5.1% and 3.7% providing stable returns for investors.
- Future Growth Potential: As AI infrastructure builds out, Eaton, Texas Instruments, and Brookfield Renewable are all poised to benefit, with Eaton's spin-off plan driving growth, Texas Instruments attracting investors with above-market dividends, and Brookfield appealing to those seeking stable income through its high dividends.
See More
