I bought Texas Instruments (NASDAQ:TXN | TXN Price Prediction) again last week, and I will buy more the next time cash lands in my brokerage. This is the analog chip company I keep coming back to, and the reason is plain: every rack of AI servers, every automated factory line, every EV powertrain needs dozens of unglamorous power and signal chips, and TI sells more of them than anyone.
The AI trade most people picture involves GPUs. My money keeps going to the picks and shovels sitting one layer beneath. On the July call, CEO Haviv Ilan described future data center power delivery moving through multiple stages: “AC to DC, maybe AC to 800 volts, and then and 800 to 48, 48 to 12”. Every one of those conversion stages is a socket for a TI analog part. He added, “the higher voltage, the more opportunity we see.”
Cash Flow Turn I Keep Underwriting
Q2 2026 is why I keep hitting buy. Revenue reached $5.463 billion, up 22.82% year over year, with diluted EPS of $2.14 against a $1.9356 estimate. Analog grew 26%, embedded processing 16%, and data center revenue doubled year over year. Trailing free cash flow hit $6.53 billion, or 33.6% of revenue, up from 10.6% a year earlier. Quarterly capex fell to $514 million from $1.305 billion a year prior, so the buildout is easing exactly as revenue accelerates.
Layer in CHIPS Act cash: $850 million in Q2 2026 and $1.6 billion of CHIPS Act incentives over the trailing 12 months. That is real capital returned by U.S. policy for factories TI already built.
A Dividend Record I Actually Trust
TI just declared a quarterly dividend of $1.42 per share, giving me a forward annual payout of $5.68. Look at the ladder: $1.02 in 2021, $1.15 in 2022, $1.24 in 2023, $1.30 in 2024, $1.36 in 2025, and $1.42 in 2026. Six consecutive annual raises straight through a chip down cycle. Over the trailing year, TI returned $5.8 billion to owners.
Why I Skip the Obvious AI Names
NVIDIA (NASDAQ:NVDA) is the reflex pick, and I own some. For a retirement account, its $0.04 per share dividend and 0.02% yield give me almost nothing to reinvest. Analog Devices (NASDAQ:ADI) is the closest pure-play peer, and it trades at a 56x trailing P/E against TXN’s 41x. I would rather own the leader in 300mm analog production at a lower multiple and take the growing quarterly check while I wait.
Risk I Own With Eyes Open
Semiconductor cycles are real, and TI is exposed to them. Q4 2025 made that plain: revenue narrowly missed expectations, EPS came in at $1.27 against a $1.31 estimate, and net income slipped 3.49% year over year as depreciation from the capacity buildout climbed to $537 million. Heavy capex will keep pressuring near-term earnings if demand softens. The same buildout produced the $6.5 billion in trailing free cash flow now arriving. TI paid for the factories at the bottom of the cycle so it could run them at the top.
Ilan put it plainly: “our objective and best metric to measure progress and generate value for owners is the long-term growth of free cash flow per share.” That sentence is why I keep buying, and the next dip in the stock will find me at the buy button again.
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