It has been about a month since the last earnings report for Texas Instruments (TXN). Shares have lost about 6.8% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Texas Instruments due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Texas Instruments Q2 Earnings Beat Estimates, Revenues Rise Y/Y

Texas Instruments reported second-quarter 2026 earnings of $2.14 per share, which increased 52% year over year. The bottom line beat the Zacks Consensus Estimate by 12%.

TXN posted revenues of $5.46 billion, which rose 23% from the year-ago quarter. The top line surpassed the consensus mark by 4.6%, driven by strength in industrial, data center and automotive markets.

TXN’s Segment Mix Highlights Broad-Based Growth

Texas Instruments’ second-quarter results reflected strength across its two core operating segments.

Analog revenues came in at $4.37 billion (79.9% of total revenues), which grew 26% from the year-ago quarter, underscoring improving demand conditions across key end markets. The figure came above our model estimate of $4.08 billion.

Embedded Processing revenues totaled $788 million (14.4% of total revenues), reflecting 16.1% year-over-year growth. The figure missed our model estimate of $799.1 million.

The Other segment generated $310 million of revenues (5.7% of total revenues), which declined 2.2% from the prior-year period. The figure missed our model estimate of $328.5 million.

Texas Instruments Expands Operating Leverage

Texas Instruments’ gross profit increased 30% year over year to $3.35 billion. Gross margin of 61.4% expanded 350 basis points (bps) year over year.

Selling, general and administrative (SG&A) expenses increased 1% year over year to $490 million. As a percentage of revenues, SG&A expenses contracted 190 bps year over year to 9%.

Research and development expenses increased 1.5% year over year to $535 million. As a percentage of revenues, it decreased 210 bps year over year to 9.8%.

Operating profit rose 47.8% year over year to $2.31 billion. The operating margin was 42.3%, which expanded 710 bps from the prior-year quarter’s number.

TXN Cash Generation Supports Shareholder Returns

As of June 30, 2026, the cash and short-term investment balance was $7 billion, up from $5.1 billion as of March 31, 2026.

At the end of the reported quarter, TXN’s long-term debt was $12.903 billion compared with $12.901 billion in the previous quarter.

Texas Instruments generated an operating cash flow of approximately $2.7 billion in the second quarter. During the second quarter, it repurchased stocks worth $27 million and paid $1.295 billion in dividends.

Texas Instruments Initiates Guidance for Q3 2026

Management’s outlook calls for third-quarter 2026 revenues in the range of $5.65-$6.15 billion.

The company expects an effective tax rate of about 13% in the third quarter. Texas Instruments expects earnings per share between $2.23 and $2.57.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates review.

The consensus estimate has shifted 14.26% due to these changes.

VGM Scores

At this time, Texas Instruments has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock has a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Texas Instruments has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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