TXN's Top Line Rebounds: Is Semiconductor Recovery the Catalyst?

Texas Instruments’ TXN top line is recovering after a slowdown in 2023 and 2024. In its second quarter of 2025, TXN’s revenues came in at $4.45 billion, representing year-over-year growth of 16.4%. The recovery has mainly been due to traction in both analog and embedded processing segments.

Texas Instruments is benefiting from traction in broad industrial demand, AI-driven data center growth and China rebound. Per a report by the Semiconductor Industry Association, the global semiconductor market is demonstrating signs of robust growth, with an 18.8% year-over-year rise in sales in the March-end quarter of 2025, reaching $167.7 billion.

As Texas Instruments serves diverse end markets like personal electronics, industrial, communications and automotive, it gains from new development in all of these markets. The diverse client base also provides stability against seasonality and cyclical downturns.

In the second quarter 2025, TXN’s automotive market increased mid-single digits year over year, Personal electronics grew around 25% year over year, Enterprise systems grew about 40% year over year and communications equipment grew more than 50% year over year, boosting its top line.

Federal incentives like the CHIPS Act for fab expansions are also a tailwind for TXN’s long-term strategy. Texas Instruments has been awarded up to $1.6 billion in CHIPS Act funding, with total benefits from the program expected to reach $7.5 billion to $9.5 billion over its lifetime. These incentives will help TXN expand manufacturing in-house, helping it gain economies of scale in the long term.

How Competitors Fare Against TXN

Other semiconductor giants like Broadcom AVGO and Analog Devices ADI are also gaining from the recovery of the semiconductor industry. Broadcom’s net revenues increased 20% year over year to $15 billion in the second quarter of 2025. Analog Devices’ second-quarter fiscal 2025 revenues of $2.64 billion increased 22.2% year over year.

Analog Devices is the second-largest producer of analog chips after Texas Instruments. Its strong market position in high-performance analog and digital signal processors for industrial, communications infrastructure and consumer markets is a tailwind. Broadcom is experiencing strong momentum fueled by growth in AI semiconductors.

TXN’s Price Performance, Valuation and Estimates

Shares of TXN have gained 3.7% year to date compared with the Zacks Semiconductor - General industry’s growth of 33.2%.

TXN YTD Performance Chart

From a valuation standpoint, TXN trades at a forward price-to-sales ratio of 9.48X, lower than the industry’s average of 16.16X.

TXN Forward 12 Month (P/S) Valuation Chart

The Zacks Consensus Estimate for TXN’s 2025 and 2026 earnings implies year-over-year growth of 7.7% and 14.8%, respectively. The estimates for 2025 and 2026 earnings have been revised upward in the past 30 days.

TXN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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