Analyst(s): Brendan Burke
Publication Date: November 2, 2026
Texas Instruments delivered a broad-based quarter in which industrial revenue set a new peak and data center became a meaningful share of the business. Years of investment in 300mm cleanroom space are now turning into supply assurance, firmer pricing, and margin expansion as the analog cycle tightens.
What Is Covered in This Article:
- Texas Instruments’ Q3 FY 2026 financial results
- Data center sales nearly double YoY
- Industrial reaches a new revenue peak
- Capacity investments support pricing and margins
- Guidance and Final Thoughts
The News: Texas Instruments (NASDAQ: TXN) reported third quarter results for the period ended September 30, 2026. Revenue was $6.06 billion, up 28% year on year (YoY) and 11% sequentially, versus consensus of $5.93 billion. By segment, Analog revenue was $4.91 billion (up 32% YoY), Embedded Processing revenue was $858 million (up 21% YoY), and Other revenue was $286 million (down 6% YoY). Gross profit was $3.89 billion, or 64% of revenue, up 280 basis points sequentially. Operating profit was $2.87 billion, up 73% YoY, representing 47% of revenue. Net income was $2.43 billion, up 78% YoY, and diluted earnings per share (EPS) was $2.62, up 77% YoY.
“Revenue increased 11% sequentially and 28% from the same quarter a year ago with continued broad growth in industrial, automotive and data center,” said Haviv Ilan, Chairman, President and CEO of Texas Instruments. “Secular growth of semiconductor content is continuing alongside a strong cyclical recovery.”
Texas Instruments Q3 FY 2026 Earnings Beat as Data Center Sales Nearly Double
Analyst Take: Texas Instruments’ third quarter is the clearest evidence yet that its multi-year bet on internal 300mm capacity was timed correctly. Growth was broad, with every end market and region expanding sequentially, but the mix shifted decisively toward industrial and data center, two markets where TI earns its best margins and longest product lifecycles. Gross margin rose 280 basis points in a single quarter, and management credited pricing, factory loadings, and mix in addition to volume. Analog supply outside China has barely grown in four years, and TI is one of the few suppliers with empty cleanroom space ready for tools. In my view, TI has moved from a cash-flow defense story to a supply-assurance story, and that shift gives it pricing power it has not held since 2022.
Data Center Becomes a Growth Engine for Foundational Chips
Data center revenue grew about 95% YoY and about 20% sequentially, and now represents roughly 13% of total revenue. Management described demand from AI compute and networking racks as secular rather than seasonal, with customers adding telemetry, cooling control, and power conversion to protect very expensive assets. TI is selling about 10,000 generic part numbers into the market, and that count grows every quarter, which shows how much of the opportunity sits in breadth rather than a few marquee sockets. The company is also pursuing more application-specific power sockets, with early ramps underway at its Sherman fab. Rising rack power density and higher operating voltages both expand TI’s content per system, a point management stressed repeatedly. TI does not need to win the accelerator to profit from AI buildouts; it needs to stay the default supplier for the power and signal chain around it, and the part count suggests it is.
TI’s October product launches at the Open Compute Project (OCP) Global Summit show where the next layer of that content gain comes from. The company debuted the ADC34DSO75, which it describes as the first analog-to-digital converter to enable 24/7, event-based remote monitoring of power rails at nanosecond resolution, sampling at 3 gigasamples per second versus the tens to hundreds of kilosamples per second of today’s power-rail monitors, a gap TI frames as thousands of times faster. Alongside it came the LMI800PS, the industry’s first 800V isolated hot-swap controller, which replaces a five-chip discrete design with a single package, cuts board area by more than 60%, and was designed against OCP’s Diablo 400 specification, and the LMK6B, a bulk acoustic wave oscillator with 9.6 femtoseconds of jitter at 625 MHz for networking lanes approaching 3.2 Tbps. Each product maps to a trend that management cited on the earnings call: telemetry to protect expensive accelerators, higher distribution voltages, and faster rack-scale networking.
The OCP portfolio also marks a strategic shift that the 10,000-part-number statistic understates. In its analyst pre-briefing and booth demonstrations, TI emphasized complete modules over catalog chips. The telemetry device ships as a module with 32K samples of on-chip event memory per rail, daisy-chained channels that scale monitoring across rails without added IO, and offload to a low-cost MCU instead of an FPGA. Designing the LMI800PS directly to the OCP specification positions TI inside the 800VDC rack architecture NVIDIA and the hyperscalers are standardizing, which shortens qualification cycles and converts foundational analog content into platform design wins. The implication is that data center can keep compounding ahead of unit growth, because both the voltage transition and the move from parts to solutions raise TI’s dollar content per rack. The risk is the same one that applies to every new category. Nanosecond telemetry is a market TI is creating, and adoption beyond initial hyperscaler deployments remains unproven.
Industrial Sets a New Peak on Higher Content per System
Industrial revenue rose more than 40% YoY and about 10% sequentially, and in Q3 FY 2026 it finally matched the level last reached in Q3 FY 2022. Management argued that systems designed four years after the prior peak carry far more semiconductor content, which means the recovery in units is only part of the gain. Aerospace and defense, energy infrastructure, test and measurement, and robotics led growth, with test and measurement tied directly to memory and GPU production. TI estimated its content per humanoid robot at $500 to $1,000 and expects 2027 to bring meaningful robotics ramps. Automotive also improved, rising mid-teens YoY and about 10% sequentially, with the hybrid, electric, and powertrain sector growing roughly twice as fast as the overall auto business on strength in China and the U.S. Because several industrial sectors still sit below their previous peaks, I see this cycle as early, and industrial remains the most important driver of TI’s profitability.
Downturn Capacity Turns Into Pricing Power and Margin
TI built cleanroom space and inventory while the market was weak, and that decision is now paying off as lead times for back-end tools stretch and outsourced assembly capacity tightens. The company is ramping a new assembly and test site in Malaysia, its largest, and has the Lehi 2 shell nearing completion, with tool installs paced to demand. Pricing, flat YoY in the first half of 2026, moved up in the second half, mainly in Analog, and annual negotiations for 2027 now include a supply-assurance element that management will quantify in January. Embedded Processing gross margin has improved by a couple of points per quarter and about 10 points YoY as foundry output moves into Lehi, and the Silicon Labs acquisition adds another cleanroom for that transition. Inventory ended at $4.7 billion, or 194 days, giving TI room to serve customers short on parts, particularly in automotive. Customers are paying for dependable capacity outside China and Taiwan, and TI should press that advantage in 2027 pricing rather than give it back for share.
Guidance and Final Thoughts
For Q4 FY 2026, TI guided revenue to $5.80 billion to $6.30 billion and EPS to $2.45 to $2.79, a midpoint roughly flat with Q3 that management framed as above typical seasonality. It expects an effective tax rate of about 13% in Q4 and 13% to 14% in FY 2027, with operating expenses flat to slightly up sequentially. Capital expenditures for FY 2026 should land between $2 billion and $3 billion, likely toward the upper end if tool deliveries arrive on time, with FY 2027 plans to be detailed in February. TI raised its quarterly dividend 7% to $1.52 per share, its 23rd consecutive annual increase, after returning $5.8 billion to owners over the trailing 12 months and generating $8.4 billion in free cash flow. The balance sheet holds $8.1 billion in cash and short-term investments against $13.65 billion of debt, after a $500 million repayment in the quarter. My recommendation to TI is to lock in multi-year supply agreements with data center and industrial customers while capacity is scarce, because that is how this upcycle becomes durable free cash flow per share growth rather than a single strong year.
See the full press release on Texas Instruments’ Q3 FY 2026 financial results on the company website.
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Other Insights From Futurum:
TI Debuts Nanosecond Power Telemetry at OCP to Cut AI Data Center Downtime
Texas Instruments Q2 FY 2026 Earnings Climb on Broad-Based Analog Growth
Texas Instruments Q1 FY 2026: Data Center and Industrial Demand Lift Outlook
Author Information
Brendan is Research Director, Semiconductors, Supply Chain, and Emerging Tech. He advises clients on strategic initiatives and leads the Futurum Semiconductors Practice. He is an experienced tech industry analyst who has guided tech leaders in identifying market opportunities spanning edge processors, generative AI applications, and hyperscale data centers.
Before joining Futurum, Brendan consulted with global AI leaders and served as a Senior Analyst in Emerging Technology Research at PitchBook. At PitchBook, he developed market intelligence tools for AI, highlighted by one of the industry’s most comprehensive AI semiconductor market landscapes encompassing both public and private companies. He has advised Fortune 100 tech giants, growth-stage innovators, global investors, and leading market research firms. Before PitchBook, he led research teams in tech investment banking and market research.
Brendan is based in Seattle, Washington. He has a Bachelor of Arts Degree from Amherst College.
