Texas Instruments Incorporated (TXN) Stock Valuation — DCF Analysis
Semiconductors · NASDAQ
Current Price
$301.12
Intrinsic Value
$193.39
-55.7% margin of safety
COMPETITIVE MOAT
↑Analog Chip Dominance
TXN leads in analog and embedded processing chips, essential for diverse industrial and automotive applications. This niche requires deep engineering expertise and long qualification cycles.
↑Manufacturing Scale & Efficiency
Significant investment in its own wafer fabrication facilities provides cost advantages and supply chain control. This vertical integration is difficult for competitors to replicate.
↑Strong Cash Returns
Consistent and substantial capital returns to shareholders through dividends and buybacks build investor loyalty. This financial discipline supports long-term valuation.
INVESTMENT RISKS
↓Cyclical Semiconductor Market
The semiconductor industry is inherently cyclical, subject to fluctuations in global demand and inventory levels. This can impact TXN's revenue and profitability.
↓AI Growth Expectations
While benefiting from AI infrastructure, TXN faces scrutiny if AI growth projections falter. Competitors with more direct AI chip exposure could gain favor.
↓Technological Obsolescence
Rapid advancements in chip technology require continuous R&D investment. Failure to innovate could lead to market share erosion.
Base case
TXN base case valuation
A base case discounted cash flow model for TXN estimates an intrinsic value of about $193.39 per share, against a current price of $301.12. The model assumes 17.2% annual free cash flow growth, a 10.0% discount rate, and a 30x exit multiple.
Intrinsic Value
$193.39
Margin of safety
-55.7%
Expected annual return
-8.5%
Base case assumptions: 17.2% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the TXN valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Texas Instruments Incorporated respond.
Open DCF Calculator for TXNCompany Overview
Texas Instruments Incorporated (TI) specializes in the global design, production, and sale of semiconductors to electronics engineers and manufacturers. Its operations are structured into two core segments: Analog and Embedded Processing. The Analog division provides a comprehensive suite of power management products, such as battery-management solutions, various DC/DC and AC/DC switching regulators and controllers, power switches, linear regulators, voltage supervisors, references, and lighting components, all critical for managing diverse power needs. This segment also delivers signal chain products designed to sense, condition, and measure electrical signals, facilitating information transfer or conversion for further processing and control, encompassing items like amplifiers, data converters, interface devices, motor drives, clocks, and sensing technologies. The Embedded Processing segment develops microcontrollers, integral to a wide array of electronic equipment; digital signal processors (DSPs) for complex mathematical computations; and applications processors tailored for specific computing tasks. Products from this segment are utilized across numerous markets, including industrial applications, the automotive sector, personal electronics, communication systems, enterprise solutions, and calculators. Beyond these, TI also produces DLP® products, primarily used in projectors to generate high-definition images; a range of calculators; and custom application-specific integrated circuits (ASICs). The company distributes its semiconductor offerings through a direct sales force, its network of authorized distributors, and its official website. Established in 1930, Texas Instruments is headquartered in Dallas, Texas.
Financial Metrics — TXN Stock Valuation Data
Revenue/Share (TTM)
$20.28
FCF/Share (TTM)
$4.09
ROIC (TTM)
17.5%
ROE (TTM)
32.5%
P/FCF
73.6x
EV/EBITDA
34.5x
FCF Yield
1.36%
Debt/Equity
0.84x
Based on trailing twelve-month data, TXN shows a free cash flow per share of $4.09 and a ROIC of 17.5%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 73.6x and FCF yield of 1.36% are important context metrics when evaluating TXN's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of TXN?
Texas Instruments Incorporated currently generates $4.09 in free cash flow per share. At the current price of $301.12, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is TXN undervalued?
TXN trades at a P/FCF ratio of 73.6x with a free cash flow yield of 1.36%. This elevated P/FCF suggests the market is pricing in significant future growth. However, whether TXN is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value TXN stock using DCF?
To perform a DCF valuation on Texas Instruments Incorporated: (1) Start with the trailing free cash flow per share ($4.09) as the base, (2) project future FCF growth over 5-10 years based on Semiconductors industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting TXN's risk profile — with a debt-to-equity of 0.84x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to TXN?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Texas Instruments Incorporated, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Semiconductors trends, then discounting those amounts to today's dollars. TXN's ROIC of 17.5% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
How does WACC affect TXN stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For TXN, with a debt-to-equity ratio of 0.84x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 34.5x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See TXN PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Technology valuationsDCF and P/E value TXN with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.