AI Demand Fuels 50% Data-Center Sales Surge and $1.6B Buyback at Texas Instruments
Texas Instruments reported 50% year-over-year growth in its data-center segment in the first nine months of 2025 and has repurchased $1.6 billion of shares while raising its dividend for the 22nd straight year. The stock has climbed nearly 10% year-to-date as AI infrastructure investments accelerate demand for its analog chips.
1. Underperformance and Cyclical Challenges
Texas Instruments struggled through a downturn beginning in 2022 as its core analog chip business felt the impact of a slowing automotive sector and broader semiconductor cyclical headwinds. Between 2022 and early 2025, revenue growth lagged peer benchmarks, and net income recovery was slower than expected, constrained by tariff concerns affecting overseas consumer electronics customers. Despite a rebound in both sales and profitability in 2025, the company’s total return underperformed the S&P 500 following a decade of outperformance.
2. AI-Driven Growth Catalysts
Looking ahead, Texas Instruments stands to benefit from surging AI-related investments in data centers, autonomous driving and robotics. In the first nine months of 2025, data center segment sales jumped by 50% year over year. The company’s analog and sensor components are critical to high-performance computing infrastructure, creating a multi-year growth runway as AI workloads expand across hyperscale facilities and edge deployments.
3. Shareholder Returns and Valuation Upside
Management has leveraged recent share price weakness to repurchase $1.6 billion in stock and increase the dividend for the 22nd consecutive year, resulting in a current dividend yield near 2.9%. With a gross margin above 57% and a market capitalization around $173 billion, Texas Instruments offers both strong cash flow generation and a compelling valuation opportunity as visibility into sustained AI-driven end markets improves.