In the quarter ended December 2025, Texas Instruments reported non-GAAP earnings per share of $1.27 and revenue of $4.42 billion, both modestly below consensus estimates. Despite the top-line shortfall, free cash flow nearly doubled year-over-year to $2.94 billion, driven by a 15% reduction in capital expenditures and $200 million in incentives from the CHIPS Act. Management highlighted that this cash generation positions the company to increase its share repurchases and dividend payout in 2026.

Data center demand emerged as the standout segment, with analog and embedded processing chip orders from hyperscale customers up 70% compared with Q4 2024. This surge lifted data center revenue to 9% of total company sales, up from 5% a year earlier. Management noted that higher-margin data center applications are moving from a niche business to a material growth engine, with above-average operating margins sustained through optimized product mix and pricing discipline.

For the first quarter of fiscal 2026, Texas Instruments guided revenue between $4.32 billion and $4.68 billion, with a midpoint of $4.50 billion—marking the first sequential quarterly increase in 16 years. The company expects seasonally stronger demand across industrial, automotive and communications end markets to offset a slight year-over-year dip in earnings. This forecast underscores management’s view that analog chip demand is rebounding from a prolonged downturn and that normalized inventory levels will support sustainable growth.

Following the earnings release and guidance, at least five major Wall Street firms raised their price targets on TXN shares, including Bank of America’s upgrade to ‘Neutral’ with a new $235 objective. The shares now trade at a forward P/E of approximately 35.4, reflecting both the anticipated free cash flow recovery in 2026 and a 2.8% dividend yield. Analysts point to improving industrial orders, data center momentum and disciplined capital allocation as catalysts for further multiple expansion.