Texas Instruments Incorporated (TXN) Stock Valuation — PE Analysis
Semiconductors · NASDAQ
Current Price
$264.36
PE Ratio (TTM)
40.0x
Intrinsic Value
$350.73
+24.6% margin of safety
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 PE valuation
A base case PE valuation for TXN estimates a fair value of about $350.73 per share, against a current price of $264.36. The model assumes 13.8% annual earnings growth, a 39.81x target PE multiple, and a 10% discount rate.
Intrinsic Value
$350.73
Margin of safety
+24.6%
Expected annual return
+5.8%
Base case assumptions: 13.8% annual earnings growth, 39.81x target PE, 10% discount rate, 5 year projection. Data as of 2026-08-21.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the TXN PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Texas Instruments Incorporated respond.
Open PE 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 PE Stock Valuation Data
PE Ratio (TTM)
40.0x
PEG Ratio
2.03
Earnings Yield
2.51%
ROE (TTM)
35.8%
Revenue/Share (TTM)
$21.33
Dividend Yield
2.15%
Debt/Equity
0.78x
Frequently Asked Questions
What is the PE ratio of TXN?
The trailing twelve-month PE ratio of TXN reflects how much investors pay per dollar of Texas Instruments Incorporated's earnings. This metric is most useful when compared to Semiconductors peers and the company's own historical range.
Is TXN overvalued based on PE ratio?
TXN's PE of 40.0x combined with a PEG ratio of 2.03 provides a growth-adjusted perspective. A PEG above 2.0 means the P/E is high relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Semiconductors, a DCF analysis may be more appropriate.
How do I value TXN stock using PE ratio?
To value Texas Instruments Incorporated using PE: (1) Compare the current PE (40.0x) against the Semiconductors median to assess relative pricing, (2) check the PEG ratio (2.03) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of TXN?
TXN's PEG ratio is 2.03, calculated by dividing the PE ratio (40.0x) by the expected earnings growth rate. A PEG above 2.0 means the P/E is high relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for TXN stock valuation?
PE ratio gives a quick relative read — how TXN is priced versus Semiconductors peers. DCF provides an absolute value based on projected free cash flows. For TXN, with a strong ROE of 35.8%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See TXN DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Technology valuationsP/E and DCF value TXN with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic 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.