Texas Instruments (TXN) is back in focus after GE Appliances said it will nearly double its spending with the chipmaker and use its U.S. made semiconductors in next generation connected laundry appliances starting in 2027.

Despite the GE Appliances agreement putting Texas Instruments back in the headlines, the stock has eased recently, with the 30 day share price return down 5.31% and the 90 day share price return down 3.5%. However, the year to date share price return of 56.44% and 1 year total shareholder return of 53.25% point to strong longer term momentum.

If this kind of connected devices story has your attention, it might be a good time to scan for other chipmakers tied to similar themes using the 56 AI infrastructure stocks

The recent pullback leaves Texas Instruments trading below the average analyst target, while its own intrinsic model points to a premium. Is the market being overly cautious, or simply pricing the recent run up more realistically?

Most Popular Narrative: 36.3% Undervalued

The most followed narrative on Texas Instruments pegs fair value at $435.69 per share compared with the last close at $277.72. That gap reflects a view that the market is not fully pricing in the company’s long term manufacturing and cash flow plans.

Texas Instruments is in the midst of a multiyear capacity-expansion cycle that is temporarily suppressing free cash flow but materially enhancing the company’s long-term competitive position. The buildout of U.S.-based 300mm analog manufacturing is expected to structurally improve cost efficiency, support higher gross margins, and increase supply-chain resilience. As these assets ramp and utilization normalizes, TXN should regain its historical free-cash-flow profile, supported by diversified end-market exposure across industrial, automotive, aerospace/defense, and energy infrastructure.

Want to understand why this narrative assigns such a premium to Texas Instruments? The fair value hinges on faster earnings growth, higher profitability and a richer future P/E multiple. Curious how those pieces fit together into a $435.69 outcome?

Result: Fair Value of $435.69 (UNDERVALUED)

However, Texas Instruments still faces risks if its multiyear factory buildout drags on cash generation for longer than expected or if end markets remain weak for an extended period.

Another View on Texas Instruments Using Earnings Multiples

The popular narrative pegs Texas Instruments as undervalued, yet its current P/E of 42.2x sits below the US Semiconductor industry at 52.9x and below a peer average of 74.1x, while remaining above a fair ratio of 35.1x. That mix suggests some cushion, but also real re rating risk if sentiment cools.

For investors weighing these trade offs, it can help to see how current pricing compares with what the numbers point to over time, and where that fair ratio could pull the stock next. See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Texas Instruments for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment mixed around Texas Instruments, this is a moment to move quickly and weigh the full picture for yourself. To see both sides in one place, review the 2 key rewards and 2 important warning signs

Looking for more investment ideas beyond Texas Instruments?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.