TLDR
- Morgan Stanley raised its Q2 and Q3 estimates for Texas Instruments, citing continued strength in the semiconductor recovery
- The firm’s distributor survey showed no expected declines in analog or microcontroller units, with industrial demand holding steady
- Morgan Stanley maintained its underweight rating on TXN despite the raised estimates
- TXN declared a quarterly dividend of $1.42 per share, payable August 11, 2026, to shareholders of record July 31
- The stock last closed at $284.02, down 8.81% over the past week, though up 23.58% over the past 90 days
Texas Instruments closed at $284.02, down 2.47% on the day and 8.81% over the past week, even as Morgan Stanley lifted its near-term estimates for the chipmaker on Monday.
Texas Instruments Incorporated, TXN
The Wall Street firm raised its June and September quarter projections for TXN, pointing to above-seasonal growth in both periods. The upgrades reflect strength in analog and industrial segments, data center growth, and stable pricing.
Morgan Stanley’s AlphaWise distributor survey for Q2 2026 showed that the momentum built in Q1 is carrying through into September, though the pace has slowed compared to the sharp acceleration seen earlier in the year.
None of the distributors surveyed expect declines in analog or microcontroller units. Industrial demand held firm, while automotive delivered mixed results.
Analog and microcontroller chips are currently shipping above demand levels. Distributor momentum did ease somewhat as inventory-building plans moderated, but Morgan Stanley called this a measured continuation rather than a warning sign.
The firm said pricing remains stable and forward expectations haven’t deteriorated. The recovery looks demand-driven rather than a broad inventory restocking cycle, with selective replenishment and some supply tightness in pockets of the market.
Despite the upgraded estimates, Morgan Stanley kept its underweight rating on TXN unchanged.
Dividend Declared Amid Pullback
Away from the analyst desk, TXN’s board declared a quarterly cash dividend of $1.42 per share last week. It is payable on August 11, 2026, to stockholders of record on July 31.
The dividend news comes as the stock has pulled back from recent highs. Despite the weekly dip, TXN is still up 34.79% on a one-year total shareholder return basis.
Valuation Picture Split
On valuation, the view depends on which model you trust. The most widely followed narrative on the stock pegs fair value at $435.69 — roughly 53% above the current price — based on TXN’s long-term capacity buildout and cash generation potential.
The bull case centers on TXN’s multiyear expansion of U.S.-based 300mm analog manufacturing. That buildout is temporarily compressing free cash flow but is expected to improve cost efficiency and gross margins as utilization ramps up.
A more conservative discounted cash flow model puts fair value at $233.65, which would make TXN overvalued at current levels. The gap between the two views essentially comes down to how quickly the capacity investments translate into cash.
Key risks include the capacity cycle dragging on longer than expected or analog and embedded demand tied to AI proving softer than assumed.
Morgan Stanley kept estimates unchanged for other semiconductor names. It flagged Analog Devices as having the clearest analog and industrial exposure, ON Semiconductor as best placed for power chip tightness, and NXP as a potential beneficiary if automotive demand picks up.
TXN’s 90-day return still sits at 23.58% despite the recent slide.
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