Texas Instruments Incorporated (TXN) Intrinsic Value & DCF Valuation
Semiconductors · NASDAQ
Current Price
$264.36
Intrinsic Value
$477.71
+44.7% margin of safety
What Is Texas Instruments Incorporated's Intrinsic Value?
As of 2026-08-21, the base-case DCF model estimates the intrinsic value of Texas Instruments Incorporated (TXN) at $477.71 per share, compared with a market price of $264.36, a margin of safety of +44.7%. The base case assumes 13.8% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $401.44 to $563.97. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Texas Instruments Incorporated (TXN) Undervalued?
At the current price of $264.36, TXN trades well below the base-case intrinsic value estimate, a margin of safety above 30%. By this model the stock looks undervalued, but verify the growth assumptions match your own view before acting.
COMPETITIVE MOAT
↑Manufacturing Scale and Efficiency
TI's extensive manufacturing capacity and advanced processes create significant cost advantages. This scale allows for efficient production of a wide range of analog and embedded chips.
↑Broad Product Portfolio
TI offers a vast catalog of analog and embedded processing products. This breadth serves diverse markets, reducing reliance on any single segment and fostering customer loyalty.
↑Long Product Lifecycles
Many of TI's products are designed for long lifecycles in industrial and automotive applications. This creates sticky customer relationships and predictable revenue streams.
INVESTMENT RISKS
↓Cyclical Semiconductor Market
The semiconductor industry is inherently cyclical, subject to fluctuations in demand and inventory levels. Downturns can significantly impact TI's revenue and profitability.
↓Geopolitical Tensions
Global trade disputes and geopolitical instability can disrupt supply chains and impact access to key raw materials or markets. This poses a risk to TI's international operations and sales.
↓Capital Intensity and R&D Costs
Maintaining its manufacturing edge and developing new technologies requires substantial capital investment in foundries and ongoing R&D. These costs can strain profitability, especially during market downturns.
Base case
TXN base case valuation
Intrinsic Value
$477.71
Margin of safety
+44.7%
Expected annual return
+12.6%
Base case assumptions: 13.8% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-08-21.
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)
$21.33
FCF/Share (TTM)
$5.87
ROIC (TTM)
18.8%
ROE (TTM)
35.8%
P/FCF
45.1x
EV/EBITDA
27.6x
FCF Yield
2.22%
Debt/Equity
0.78x
Based on trailing twelve-month data, TXN shows a free cash flow per share of $5.87 and a ROIC of 18.8%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 45.1x and FCF yield of 2.22% 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 $5.87 in free cash flow per share. At the current price of $264.36, 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 45.1x with a free cash flow yield of 2.22%. A high P/FCF means investors are paying more per dollar of free cash flow, which usually reflects expectations of 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 ($5.87) 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 0.78x, 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 18.8% reflects how efficiently the company converts invested capital into profit.
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 0.78x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 27.6x, 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 2026-08-21. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.