Texas Instruments Inc

Texas Instruments is in a strong, broad cyclical upswing, and it is landing on a factory base the company has essentially finished building. Third-quarter revenue rose 28% to $6.06B, gross margin reached 64.2% against 57.4% a year earlier, and trailing-12-month capital spending roughly halved to $2.6B. Together these lifted trailing free cash flow to $8.4B, although about $1.6B of that is CHIPS Act government support that will shrink. The balance sheet can absorb the $7.5B Silicon Labs purchase with committed financing. The open question is how much of the demand is lasting rather than cyclical; management itself describes secular growth continuing alongside a "strong cyclical recovery".

• Revenue was $6,055M, up 28% from a year earlier and 11% from the prior quarter. Operating profit was $2,874M versus $1,663M, and diluted EPS was $2.62 versus $1.48.
• Fourth-quarter guidance is revenue of $5.80–6.30B and EPS of $2.45–2.79. The midpoint is roughly flat with the third quarter, even though the fourth quarter is historically seasonally weaker.
• The quarterly dividend rises 7% to $1.52. TI repaid $500M of maturing notes in September.
• The Silicon Labs deal ($231 per share in cash, enterprise value about $7.5B) is still expected to close in the first half of 2027. A $5B, 364-day delayed-draw term loan signed in June backs it.
• Julie Knecht signed the 10-Q as CFO. Rafael Lizardi had signed the 10-K in that role.

Its findings, each with the evidence, the strongest counterpoint and what would prove it wrong:

• The upturn is broad, and fixed-cost factories are converting it into outsized margin gains
• Cash generation has stepped up as the spending cycle ends, but government support inflates it
• Cash is being stockpiled for Silicon Labs, and buybacks no longer offset dilution
• Growth leans on a few hot markets, and its durability is unproven

Then its finances, the quality of its earnings, its management, the case for and against, and what to watch, its claims cited to the filings and checked against them.

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