Buy Texas Instruments Instead of Nvidia for Unique Growth Potential

Texas Instruments (TXN) stock has rebounded 50% from its April lows and is just 2% off new all-time highs. Analysts at TD Cowen project $7 per share in free cash flow, driven by the company's solid US footprint. While the valuation is rich, with a forward P/E ratio of nearly 40x and a price-sales ratio of 12.6x, a $245 price target implies a free cash flow yield of just under 3%. The real catalyst for TXN stock could be its profit margin and return on equity.

Texas Instruments Inc (TXN) is poised to report strong quarterly earnings and revenue growth when it releases its results on July 22 for the period ending June 30, 2025. Analysts predict a 13.8% increase in revenue to $4.349 billion, up from $3.82 billion a year ago [1]. This represents a significant improvement over the previous quarter, where the company reported a 19.9% beat in earnings per share (EPS) [1].

The Dallas, Texas-based semiconductor company has also provided guidance for the period, projecting revenue between $4.17 billion and $4.53 billion, with earnings per share (EPS) expected to range between $1.21 and $1.47 [1]. Analysts have a mean estimate for EPS of $1.35 per share, reflecting a 20.1% increase year-over-year [1].

Stifel, a leading financial services firm, recently raised its price target for TXN to $192.00, a 20% increase from the previous target of $160.00 [2]. This adjustment reflects the company's strong financial outlook and market positioning. Stifel maintains a "Hold" rating on the stock, suggesting a cautious approach despite the upward revision in the price target.

Analysts generally have a positive outlook on TXN stock, with a consensus rating of "Buy" and an average price target of $204.89, implying a -5.42% decrease in the stock price over the next year [3]. However, the stock's valuation remains rich, with a forward P/E ratio of nearly 40x and a price-sales ratio of 12.6x [3].

The real catalyst for TXN stock could be its profit margin and return on equity. Analysts at TD Cowen project $7 per share in free cash flow, driven by the company's solid US footprint [3]. While the valuation is rich, the implied free cash flow yield of just under 3% could attract investors seeking income and growth.

In summary, TXN stock is expected to report strong quarterly earnings and revenue growth, with analysts projecting a 13.8% increase in revenue and a 20.1% increase in EPS year-over-year. The stock's valuation remains rich, but analysts' positive outlook and recent price target adjustments could provide support for future growth.

References:
[1] Reuters. (2025). Texas Instruments Inc expected to post earnings of $1.35 a share - earnings preview. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L8N3TF1ZU:0-texas-instruments-inc-expected-to-post-earnings-of-1-35-a-share-earnings-preview/
[2] Gurufocus. (2025). Stifel raises price target for Texas Instruments (TXN). Retrieved from https://www.gurufocus.com/news/2987895/stifel-raises-price-target-for-texas-instruments-txn-to-192-txn-stock-news
[3] Stockanalysis. (2025). Texas Instruments stock forecast. Retrieved from https://stockanalysis.com/stocks/txn/forecast/