Susquehanna Reaffirms Positive on Texas Instruments, $340 Price Target

Susquehanna analyst Christopher Rolland reiterated a Positive rating and $340 price target on Texas Instruments (NASDAQ: TXN).

“TI reported better results and guidance, driven by the continued broad-based upcycle and an increasing contribution from its Data Center business.

More specifically, revenues in 3Q bested our expectations by ~$80M, while guidance for 4Q was ~$270M better than our prior expectations.

On a segment level, Data Center contributed the bulk of the upside in the quarter, besting our expectations by ~$55M, as TI and other analog peers have continued to benefit from the broader AI buildout.

Meanwhile, Automotive was ~$10M better than our prior expectations, with strength primarily stemming from the Chinese and North American markets.

Interestingly, the company insisted it did not see a meaningful contribution from any inventory restocking here.

Indeed, CEO Ilan noted that customers’ inventory position remained lean and expressed optimism that the uptick in demand would continue into 4Q.

Industrial was similarly ~$10M better than our prior expectations.

Strength was once again broad-based, spanning cyclical sub-segments such as Industrial Automation, as well as secular growth in Aerospace and Defense, Energy Infrastructure, and Robotics.

Lastly, Personal Electronics was generally in line with our expectations.

For inventory, internal inventory days declined two days to 194 days (slightly below its long-term target midpoint of 150-250 days).

Given the broad uptick in demand, the company did note that its leadtimes (LTs) were increasingly coming under pressure (this was largely corroborated by our SemiSIGnals data, where LTs expanded four weeks QOQ to 16.1 weeks).

Perhaps most interestingly, the company finally acknowledged it was beginning to benefit from an increase in pricing on its Analog portfolio.

The company even appeared to open the door to a larger contribution here in 2027.

Beyond the top line, 3Q GMs were 220 bps better than expected, primarily owing to higher revenue flow-through, but also pricing benefits, higher loadings, and mix tailwinds.

In all, we are increasing our 2027 EPS by $1.15 with higher revenue and better gross margins contributing roughly evenly to the increase.

Overall, this was another generally strong quarter from TI as the upcycle remains well on its tracks. We reiterate our Positive rating and $340 price target (~32.5x C2027E EV/NOPAT).”

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