Every AI Data Center Runs on Its Chips. Its Report Card Arrives October 21.

Research Desk · October 9, 2026

Texas Instruments logo, via Wikimedia Commons. Trademark of Texas Instruments Incorporated, shown for editorial identification.

Earnings season starts next week with the big banks. The technology sector follows close behind.

One of the first major chip reports on the calendar does not come from a famous AI name. It comes from a 96-year-old Dallas company that most investors know from the calculator they used in high school.

Texas Instruments (NASDAQ: TXN) reports on October 21. Wall Street watches it closely, because TI sells into nearly every corner of the economy.

When its order book moves, factories, carmakers and data centers are usually moving with it.

The Chips Nobody Talks About, and Everything Needs

Most of the attention in semiconductors goes to the processors that do the thinking. Texas Instruments makes something more basic, and in many ways more essential.

Its specialty is analog chips. These are the parts that translate the real world into electronics: power, temperature, voltage, sound and motion.

Think of a new house. The architect and the smart thermostat get the credit. But nothing works without the wiring, the breaker panel and the outlets.

TI makes the electrical system. Every server rack, every electric vehicle and every factory robot needs chips that manage and convert power, and TI sells tens of thousands of them to more than 100,000 customers.

That is why the AI boom shows up in its numbers. A modern AI rack draws enormous amounts of electricity, and each step of delivering that power safely runs through chips like TI's.

The Numbers Turned Sharply Higher This Year

For two years, TI endured a long slump as customers worked through excess inventory. That cycle has turned.

Second-quarter revenue reached $5.46 billion, up 23% from a year earlier and 13% from the prior quarter. Earnings of $2.14 per share beat the Street's estimate of $1.91.

The growth was broad. Industrial sales rose about 30%. Automotive grew in the mid-teens. Data center revenue doubled.

Operating margin expanded to 42%, up from about 35% a year ago. Trailing free cash flow climbed to $6.5 billion, from just $1.8 billion a year earlier.

Management then guided third-quarter revenue to between $5.65 billion and $6.15 billion, above the seasonal pattern TI usually sees. Analysts now expect about $5.91 billion and earnings near $2.41 per share.

Two details from the last call matter for October 21. Lead times have started to stretch, and TI said price increases would begin to show up this quarter, with more in the fourth quarter and into next year.

A Dividend Built for Patient Owners

For income-minded investors, the September announcement may be the most important number of all.

TI raised its quarterly dividend 7%, from $1.42 to $1.52 per share. That works out to $6.08 a year, roughly a 2.2% yield at today's price.

It is the 23rd consecutive year of increases. The higher payment goes out November 10 to shareholders of record on October 30.

Over the past twelve months, TI returned $5.8 billion to owners. Its stated goal is to return all free cash flow to shareholders over time.

The One Blemish

Not every corner of the business is firing. Personal electronics revenue was flat from a year ago, a reminder that consumer gadgets remain soft.

TI is also near the end of a heavy, multi-year factory buildout in Texas and Utah. Those new plants lower its cost per chip over time, but they add depreciation costs today.

And the stock has already run. It started the year near $175 and touched about $334 before pulling back. Some of the good news is in the price.

What You Pay, and What Could Go Wrong

At roughly $280, the shares trade near 43 times trailing earnings. On next year's estimates, the multiple drops to about 30.

That is a premium for a company growing again at double-digit rates, with margins still recovering. If the upcycle runs another year, earnings could grow into the price.

The bear case is simple. Chip cycles turn, and TI has a meaningful share of sales in China.

If orders cool and the stock returns to a low-20s multiple of forward earnings, the math points back toward $200 a share. That would be close to 30% below today's level.

The Bottom Line

Texas Instruments is not a moonshot. It is the company that supplies the wiring for nearly everything electronic, from factory floors to AI data centers.

The October 21 report will show whether this year's recovery has staying power, and whether those price increases are reaching the bottom line.

Meanwhile, owners collect a dividend that has risen for 23 straight years and just got another 7% raise. For a patient investor, that is a reasonable way to be paid while waiting for the answer.