Did The Market Read Texas Instruments Stock Right

Shares of Texas Instruments (TXN) rose 60.4% in the twelve months to October 19, 2026, against 16.8% for the S&P 500. The stock posted its largest one-day gain in that time on April 23, 2026. It climbed 19.4% the day after the chip maker reported first-quarter results and forecast second-quarter revenue above Wall Street estimates. So what changed inside Texas Instruments to earn that price?

Texas Instruments' Sales Growth Picked Up In 2026

Texas Instruments has issued four quarterly reports since last October. Sales growth slowed in the first two periods, from 16.4% in fiscal Q2 2025 to 14.2% in fiscal Q3 2025 and 10.4% in fiscal Q4 2025. Growth then picked up in the next two quarters. Revenue climbed 18.6% in fiscal Q1 2026, and rose 22.8% to $5.46 billion in fiscal Q2 2026.

Reuters tied both forecasts that came before the stock's biggest jumps to data centers. In January, the news agency linked a jump in the shares on January 28 to a first-quarter outlook that signaled robust AI data center demand. The stock closed 9.9% higher that day. In April, Reuters said Texas Instruments expected a boost in demand for its analog chips from data center development. On the fiscal Q2 2026 call in July, management said data center revenue had doubled from a year earlier.

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Investors Paid Up Faster Than Texas Instruments' Profit Grew

Texas Instruments also kept more of those sales as profit. Over the twelve months to June 30, 2026, revenue grew 16.7%. The company earned an operating margin of 38.1% in that time, up from 34.9% a year earlier. Free cash flow over the same twelve months rose to $5.36 billion from $1.5 billion.

The share price rose faster than earnings, though. At the end of June 2026, the shares traded at 44.9 times trailing earnings, up from 37.4 a year earlier. That was the highest multiple at any quarter end since 2016, so the share price ran ahead of the earnings recovery. At the October 19, 2026 close, the multiple was 41.6, against 22.9 for the S&P 500.

What Has Not Changed At Texas Instruments

Texas Instruments has won back its sales, but it has not grown past its last peak. Revenue of $19.5 billion in the twelve months to June 2026 is about where it stood four years earlier, at $19.6 billion. In those earlier twelve months, the company kept far more of each dollar, with an operating margin of 52.7%, while its shares traded at 16.5 times earnings.

That gap in margin is what the business has not closed, even as the shares rose. Operating margin was 42.6% in fiscal Q2 2026, and it is the measure to watch when Texas Instruments next reports, expected on or around October 21, 2026.

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