Should You Buy Texas Instruments Stock Despite Its Premium Valuation?

Texas Instruments reported Q2'26 results with revenue up 23% and earnings per share climbing 52%, while data center revenue doubled year-over-year. The analog and embedded chipmaker now trades at 26.97x forward P/E, a premium to the semiconductor sector average of 20.22x.

TXN is capitalizing on AI infrastructure demand through its analog and embedded processors, which serve as critical components in data center builds. The company plans to bring 95% of wafer production in-house by 2030, a vertical integration move aimed at protecting margins and supply security. Management continues to generate significant free cash flow, supporting both the capacity expansion and shareholder returns.

Zacks Investment Research assigned TXN a Rank #2 (Buy) rating, arguing the valuation premium is warranted given the growth trajectory and operational leverage from internal manufacturing.