TEXAS INSTRUMENTS INC (TXN) Pre-Earnings Brief

Q1: Does Q1 2026 revenue guidance midpoint exceed $4.5 billion, and what does the full-year 2026 revenue outlook imply for growth?

Why it matters: As a core standard metric in the investment thesis for TXN, revenue growth signals demand recovery in key end markets like industrial and data center; consistent beats or raises would support re-rating given TXN's history of providing limited formal guidance but directional commentary.

Bull answer: Management provides Q1 revenue guidance above $4.5B midpoint and signals mid-teens or higher full-year growth driven by strengthening orders in industrial and data center, indicating accelerating recovery.

Bear answer: Q1 guidance comes in at or below $4.5B midpoint with cautious or flat full-year commentary, suggesting persistent softness in industrial demand and limited visibility.

Q2: Will Q1 2026 EPS come in above the $1.37 consensus estimate, with commentary on gross margin trends?

Why it matters: EPS is a key standard metric watched by investors; outperformance combined with margin commentary would validate cost discipline from manufacturing investments and support the free cash flow growth narrative central to the long-term thesis.

Bull answer: EPS beats $1.37 with expanding gross margins from 300mm wafer ramps and utilization improvements, pointing to operating leverage and higher full-year profitability.

Bear answer: EPS meets or misses $1.37 with flat or contracting margins due to pricing pressure or lower utilization, raising concerns over near-term profitability.

Q3: Has data center revenue reached or exceeded 11% of total revenue with 70%+ year-over-year growth?

Why it matters: Data center (including AI-related) is an emerging high-growth area for TXN's analog and embedded products; hitting this threshold would validate the thesis that TXN is gaining meaningful exposure to secular AI tailwinds beyond traditional industrial cycles.

Bull answer: Data center now represents 11%+ of revenue with over 70% YoY growth, and management sees it continuing to ramp as a key contributor to overall growth.

Bear answer: Data center remains below 11% with growth slowing below 70% YoY, indicating limited AI upside or dependency on broader market recovery.

Q4: Does industrial end-market revenue show sequential or year-over-year growth exceeding low double-digits in Q1 commentary?

Why it matters: Industrial is TXN's largest end market; sustained growth here is critical to the investment thesis as it drives the bulk of revenue stability and would confirm the end of inventory digestion and order strengthening seen in recent quarters.

Bull answer: Industrial grows above low double-digits YoY/sequentially with broad-based order strength and positive inventory trends across customers.

Bear answer: Industrial growth is flat or single-digit, with continued caution on demand visibility and inventory levels.

Q5: Is free cash flow per share on track to exceed $8 for full-year 2026?

Why it matters: With TXN transitioning from heavy capex to a harvest phase post-manufacturing buildout, FCF growth underpins dividend sustainability, share repurchases, and overall shareholder returns in the investment thesis.

Bull answer: Management reaffirms or raises confidence in FCF/share above $8 for 2026, citing improving utilization, lower capex intensity, and working capital benefits.

Bear answer: FCF/share guidance or commentary falls short of $8 due to sustained higher capex or weaker cash conversion from soft demand.

Q6: Are analog segment revenues growing faster than embedded processing, with operating profit margins stable or expanding?

Why it matters: Analog is TXN's core high-margin business (historically ~80% of revenue); stronger analog performance relative to embedded would reinforce competitive positioning and margin resilience key to long-term earnings power.

Bull answer: Analog grows faster than embedded with operating margins holding or expanding due to mix and cost efficiencies.

Bear answer: Analog growth lags or matches embedded with margin pressure from pricing or mix shifts.