Texas Instruments (TXN) — Q3 2026 Earnings Preview
Key Points
| Factor | Details |
|---|---|
| Consensus Q3 2026 Revenue | $5,908M (+23% YoY vs. Q3 2025 actual $4,700M) |
| Consensus Q3 2026 EPS | $2.42 (+63% YoY vs. Q3 2025 actual $1.48) |
| Gross Margin Consensus | 61.8% (Q3 2025 actual: 57.7%) |
| Guidance for Q3 2026 | Revenue: $5,650M–$6,150M; EPS: $2.23–$2.57 |
| Q2 2026 Actuals | Revenue: $5,500M (+23% YoY, +13% QoQ); EPS: $2.14; Gross Margin: 61% |
| Q2 2026 Guidance Beat | Q2 revenue and EPS both exceeded guidance; strong upside in industrial, data center, auto |
| Q3 2025 Actuals | Revenue: $4,700M; EPS: $1.48; Gross Margin: 57.7% |
| Comparables | Q3 2026 faces a relatively easy YoY compare due to strong acceleration in 2026 |
Most Important Factors to Watch for Q3 2026
| Factor | Why It Matters |
|---|---|
| Revenue Growth | Consensus expects +23% YoY; market will focus on sustainability of broad-based demand across all end markets |
| Gross Margin | Consensus at 61.8%, up sharply YoY; margin expansion from higher utilization, pricing, and mix |
| Pricing Power | Management confirmed price increases are being executed in Q3/Q4; breadth and magnitude of these increases |
| Segment Performance | Industrial, automotive, and data center are key drivers; watch for continued strength and breadth of recovery |
| Inventory/Loadings | Inventory days trending down (Q2: 196 days); loadings increased in Q2, further increases expected in Q3 |
| CapEx/Capacity Utilization | CapEx running at lower end of $2B–$3B range; ability to flex capacity to meet demand is a competitive advantage |
| Free Cash Flow | Trailing 12-month FCF at $6.5B in Q2; tracking above $8/share target for FY26 |
| Guidance for Q4 2026 | Market will look for signals on sustainability of growth, especially after two consecutive above-seasonal quarters |
Quarterly Financials — Actuals and Consensus
Quarterly Results and Consensus ($M except per-share, margins)
| Quarter | Revenue | YoY Growth | Gross Margin | EPS | FCF/Share | Notes |
|---|---|---|---|---|---|---|
| Q3 2026E | 5,908 | +23% | 61.8% | 2.42 | 3.28 | Consensus |
| Q2 2026A | 5,500 | +23% | 61.0% | 2.14 | 2.82 | Actual |
| Q1 2026A | 4,800 | +19% | 58.0% | 1.68 | 2.23 | Actual |
| Q4 2025A | 4,400 | +10% | 54.8% | 1.27 | 2.18 | Actual |
| Q3 2025A | 4,700 | +14% | 57.7% | 1.48 | 1.91 | Actual |
*Consensus figures are not actuals.
Guidance Summary — Q3 2026
| Metric | Guidance Range | Context Notes |
|---|---|---|
| Revenue ($M) | 5,650 – 6,150 | Above seasonal; driven by broad-based demand in industrial, data center, and automotive |
| EPS ($) | 2.23 – 2.57 | Reflects higher loadings, stable OpEx, and initial impact of price increases |
| Gross Margin | Implied to be slightly up QoQ; consensus at 61.8% | |
| Tax Rate | ~13% | No change |
| CapEx ($M) | 2,000 – 3,000 (FY) | Tracking toward lower end, but could move higher if demand remains strong |
Q2 2026 Recap and Recent Trends
- Q2 2026 revenue was $5,500M (+23% YoY, +13% QoQ), well above guidance.
- Gross margin expanded to 61% (+340 bps QoQ), driven by higher utilization and favorable mix.
- EPS was $2.14, above consensus and guidance.
- Free cash flow on a trailing 12-month basis reached $6.5B, up sharply YoY.
- Inventory declined to $4.6B (196 days, down 13 days QoQ), reflecting strong demand and higher shipments.
- Loadings increased throughout Q2 and are expected to rise further in Q3.
- Management confirmed that price increases are being executed in Q3 and will continue into Q4 and 2027, with the largest impact in Analog, but Embedded also joining.
- Data center revenue doubled YoY in Q2; industrial grew ~30% YoY; automotive up mid-teens YoY with sequential acceleration.
Q3 2025 Actuals — Prior Year Comparable
| Metric | Q3 2025 Actual | YoY Growth vs. Q3 2024 |
|---|---|---|
| Revenue ($M) | 4,700 | +14% |
| Gross Margin | 57.7% | |
| EPS ($) | 1.48 |
- Q3 2025 was a recovery quarter, but Q3 2026 faces a much easier comparable given the acceleration in 2026 and management's commentary on broad-based demand.
Segment and End-Market Trends
- Industrial: Q2 2026 up ~30% YoY, up 10% QoQ; still below 2022 peak, suggesting more room for growth.
- Automotive: Q2 2026 up mid-teens YoY, up upper single digits QoQ; Q3 expected to remain strong, led by China and EV/hybrid demand.
- Data Center: Q2 2026 doubled YoY, up 20% QoQ; management expects continued strong growth as AI/data center buildout continues.
- Personal Electronics: Q2 2026 flat YoY, up upper single digits QoQ; Q3 typically seasonally strong, but management expects only modest sequential growth due to memory constraints.
- Communications Equipment: Grew both YoY and QoQ in Q2 2026.
Management Commentary and Soft Guidance
- Management expects Q3 2026 to be "above seasonal" with contributions from all major end markets.
- Price increases are being executed in Q3 and will continue into Q4 and 2027, with the largest impact in Analog initially, then Embedded.
- Loadings increased in Q2 and will be adjusted further in Q3 based on demand; clean room space is available for further ramp.
- CapEx is tracking toward the lower end of the $2B–$3B range for FY26, but could move higher if demand remains strong.
- Free cash flow per share is tracking above the $8/share target for FY26.
- Lead times remain competitive, but have ticked up slightly due to demand; TI is positioned to gain share as competitors' lead times extend.
Summary and Conclusions
- Q3 2026 is set up for another strong quarter: Consensus expects +23% YoY revenue growth and significant margin expansion, with management guiding above seasonal and confirming broad-based demand.
- Key watch items: Magnitude and breadth of price increases, sustainability of industrial and data center momentum, further acceleration in automotive, and any signs of inventory restocking or double ordering.
- Comparables are favorable: Q3 2026 faces an easy YoY compare, with Q3 2025 having been a recovery quarter.
- Risks: Potential for demand normalization in H2, memory constraints impacting PE, and macro/geopolitical uncertainties.
- Conclusion: The setup for Q3 2026 is robust, with upside risk if demand and pricing trends persist. Investors should focus on the sustainability of broad-based demand, execution of price increases, and continued margin expansion.
