Texas Instruments Inc. TXN — a major original equipment manufacturer of analog, mixed-signal and digital signal processing integrated circuits — reported strong second-quarter 2026 earnings results, easily surpassing the Zacks Consensus Estimate with respect to both the top and bottom lines.
TXN continues to deliver robust profitability improvement. Gross margin reached 61.4% from 57.9% in the year-ago quarter, while operating margin expanded to 42.3% from 35.1%. Driven by higher revenues and improved margins, second-quarter earnings per share jumped 52% year over year.
Texas Instruments is benefiting from solid AI-powered data center demand, which is boosting its prospects in the enterprise systems market. As AI infrastructure scales from data centers to edge devices, vehicles, and industrial systems, TXN’s chips are becoming critical components in the broader buildout.
The chart below shows the price performance of TXN year to date.
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Robust Product Portfolio
TXN has a strong position in the foundational analog and embedded processing semiconductor markets, which are critical for long-term growth in key industries like industrial, automotive, personal electronics and AI data centers.
As cloud and AI workloads continue to rise, TXN’s strong portfolio and manufacturing scale position it well to benefit from sustained demand for efficient, high-performance power solutions in data center infrastructure.
TXN provides supplies foundational analog, power management and edge-processing semiconductors to corporate bigwigs like NVIDIA Corp. NVDA, Apple Inc. AAPL, Ford Motor Co. F and Medtronic plc MDT, to name a few.
Strong Guidance
TXN’s outlook calls for third-quarter 2026 revenues in the range of $5.65-$6.15 billion. The company expects earnings per share between $2.23 and $2.57. Management expects an effective tax rate of about 13% in the third quarter.
Solid Estimate Revisions
Texas Instruments has an expected revenue and earnings growth rate of 20.4% and 49.9%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 6.4% over the last seven days.
TXN has an expected revenue and earnings growth rate of 11.6% and 15.2%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 6.6% over the last seven days.
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Impressive Price Upside Potential
Texas Instruments sports a Zacks Rank #1 (Strong Buy) at present and has a Zacks Momentum Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The short-term average price target of brokerage firms represents an increase of 13.7% from the last closing price of $279.41. The brokerage target price is currently in the range of $215-$400. This indicates a maximum upside of 43.2% and a maximum downside of 23.1%. The risk/reward ratio is a highly favorable 1:87.
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Beyond Nvidia: AI’s Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren’t likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
Ford Motor Company (F) : Free Stock Analysis Report
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Medtronic PLC (MDT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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