Texas Instrument's Technological Shift And Why I am Rating A Buy

Summary

• I am rating Texas Instruments a Buy since it is entering a powerful multi-year expansion phase, driven by its dominant analogue franchise, internally owned 300mm manufacturing capacity and consistent FY2025 performance that delivered 13% revenue growth and 40%+ operating cash flow margins.

  
  

• The planned $7.5Bn Silicon Labs acquisition transforms TXN’s embedded strategy, adding 1,200 wireless connectivity products and enabling $450Mn in annual synergies through integration into TI’s 300mm and 28nm manufacturing ecosystem, expanding its position in industrial IoT and edge connectivity markets.

  
  

• TXN trades at 29–31x FWD earnings, roughly in line with ADI but far below Broadcom’s FWD Non-GAAP EV/EBITDA premium despite generating $7.153Bn in operating cash flow and nearly doubling free cash flow to $2.938Bn in FY2025, even during a peak capex year.

  
  

• Risks such as manufacturing execution, integration complexity and cyclical demand remain manageable and with TXN returning $6.5Bn to shareholders in the past year, the company’s structural advantages and expanding growth drivers support a compelling Buy rating.

Source; Applied materials

Want to read more?

Subscribe to henriotgroup.com to keep reading this exclusive post.

Subscribe Now