Texas Instruments (TXN) Stock Could Be 24% Undervalued After AI And Capacity Expansion Optimism - simplywall.st

Texas Instruments (TI) has regained market attention due to strong momentum in AI and data center-related markets, as well as new battery monitoring products for electric vehicles and energy storage s... Read original →

Texas Instruments’ recent rally stems less from AI hype and more from the strategic payoff of its U.S.-based 300mm analog fabs. Technically, TI’s precision battery monitors are becoming embedded in EV and energy storage BMS architectures, undercutting Infineon and Analog Devices. Its power management ICs also serve as critical redundancy in AI server power delivery. Geopolitically, CHIPS Act subsidies accelerate capacity ramp in Texas and Utah—but elevated capex suppresses near-term FCF. If industrial/auto demand softens by 2027, underutilization risks emerge. While Broadcom and AMD lock in customers via AI training ASICs, TI wisely avoids leading-edge foundry wars by dominating edge-power efficiency. Within 18 months, 300mm yields crossing 85% will unlock cost leadership and pricing power, justifying the 24% undervaluation thesis. Current DCF divergence reflects temporary cash flow distortion, not eroding moats.