This Dividend Stock Is Down 8% and That Makes It One of the Best Buys of the Year
Why it matters: Texas Instruments' $30 billion investment ensures stable, high-volume chip production, reducing reliance on external foundries.
- Texas Instruments (TXN), the largest analog semiconductor chip maker, is down 8% but is considered a strong buy due to its foundational role in AI data centers, where its power management and signal-chain chips are essential.
- CEO Haviv Ilan reported a 70% year-over-year growth in sales to data centers, underscoring the company's unexpected benefit from the AI boom.
- Texas Instruments has increased its dividend for 22 consecutive years, including a 4% raise in 2025, and boasts a current dividend yield of 2.9%, demonstrating financial stability even amidst heavy capital expenditures.
- The company invested $30 billion in a new 300mm semiconductor fabrication facility in Sherman Oaks, Texas, which began production in December, aiming to reduce reliance on external foundries and achieve 95% internal wafer production by the end of the decade.
- Texas Instruments reported $17.7 billion in revenue in 2025, up 13%, with earnings per share (EPS) increasing 4.8% to $5.45, while free cash flow surged 96% to $2.9 billion.
- Vertical integration and the use of 300mm wafers provide Texas Instruments with significant cost advantages, yielding 40% more chips per wafer than the industry-standard 200mm.
Despite being down 8%, Texas Instruments (TXN) is highlighted as a top buy due to its critical role in AI infrastructure through analog chips, with data center sales surging 70% year-over-year. The company's strategic $30 billion investment in a new 300mm fabrication facility and its commitment to internal production aim to secure stable, cost-effective supply chains for decades.
