tapebrief
TXN · Q1 2026

TXN · Q2 2026 Earnings

Bullish

Texas Instruments

Reported July 22, 2026

30-second summary

Revenue of $5.463B (+23% YoY, +13% QoQ) cleared the high end of the prior $5.00–5.40B guide by $63M and beat consensus $5.23B by 4.5%; GAAP EPS of $2.14 beat both the $2.05 high-end guide and $1.92 consensus — but the press release explicitly flags a 5-cent discrete benefit not in original guidance, so operational EPS was ~$2.09, $0.04 above the high-end guide (discrete tax items of $51M vs. $16M PY corroborate). Gross margin ripped to 61.3% from 58.0% in Q1 — a 330bps sequential expansion that answers the fall-through watch item decisively. The Q3 guide midpoint of $5.90B implies +24.5% YoY against a $4.74B Q3 FY2025 base, extending — not reverting — the acceleration management flagged three months ago.

Headline numbers

EPS

Q2 FY2026

$2.14

+11.5% vs est.

Revenue

Q2 FY2026

$5.46B

+23.0% YoY

+4.5% vs est.

Gross margin

Q2 FY2026

61.3%

Free cash flow

Q2 FY2026

$2.74B

Operating margin

Q2 FY2026

42.3%

Key financials

Q2 FY2026
MetricQ2 FY2026Q2 FY2025YoYQ1 FY2026QoQ
Revenue$5.46B$4.45B+22.8%$4.83B+13.2%
EPS$2.14$1.41+51.8%$1.68+27.4%
Gross margin61.3%57.9%+340bps58.0%+334bps
Operating margin42.3%35.1%+720bps37.4%+487bps
Free cash flow$2.74B$0.56B+393.3%$1.40B+95.7%

Guidance

Texas Instruments beat Q2 FY2026 guidance on both revenue and EPS, with strong sequential growth and raised Q3 FY2026 outlook reflecting broad-based recovery momentum across industrial, data center, and automotive end markets.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ2 FY2026$5.00B – $5.40B$5.463B+$0.063B above high end of guideBeat
EPS (GAAP)Q2 FY2026$1.77 – $2.05$2.14+$0.09 above high end of guideBeat

New guidance

MetricPeriodGuideYoY
RevenueQ3 FY2026$5.65B – $6.15B+19.4% to +29.9% YoY
EPS (GAAP)Q3 FY2026$2.23 – $2.57—

Segment performance

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Analog$4.365B$3.452B+26.4%
Embedded Processing$0.788B$0.679B+16.1%
Other$0.31B$0.317B-2.2%
Analog Revenue Growth YoY26%——
Embedded Processing Revenue Growth YoY16%——

Capacity & utilization

Q2 FY2026
SegmentQ2 FY2026
Industrial Market GrowthBroad growth led

Profitability

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Operating Margin42.3%35.1%—
Free Cash Flow Margin50.1%12.5%—
Trailing 12-Month Operating Cash Flow$8.7B——
Trailing 12-Month Free Cash Flow$6.5B$1.763B—

Other KPIs

Q2 FY2026
SegmentQ2 FY2026
Cash Returned to Shareholders (TTM)$5.8B

Management tone

Customer optimization hangover → tariff caution → explicit deceleration → "recovery is continuing" → "continued acceleration" → broad-based inflection.

Tone analysis is press-release only this quarter; the standard transcript-based tone commentary is unavailable. What can be read from the release itself: management's language shifted from Q1's "continued acceleration in industrial and data center" — a two-end-market callout — to Q2 FY2026's "broad growth led by industrial, data center and automotive." Adding automotive to the growth-leaders list is meaningful. Automotive was "in a holding pattern" in Q2 2025, "recovered to pre-cycle levels after shallow trough" in Q3 2025, and "mid-single-digit YoY" with China flat in Q1 2026. Elevating it to the leader tier alongside industrial and data center signals management now sees all three cyclical end markets moving in the same direction — the condition that has been missing from every recovery narrative since 2023.

The Q3 guide is the second signal. The $5.90B midpoint on a $4.74B prior-year base is +24.5% YoY — an acceleration from the +23% Q2 print, not a deceleration. Three quarters ago management guided Q1 to +1.7% QoQ midpoint and then delivered +9%; two quarters ago Q2 was guided to a $5.20B midpoint (+12–21% YoY) and printed $5.463B (+23% YoY). The pattern of sandbagging into accelerating demand — which the Q1 watch list flagged as the case management would need to prove — has now printed twice, though the Q2 EPS component includes a 5-cent discrete benefit that inflated the headline beat.

Answers to last quarter's watch list

Whether Q2 actual revenue hits the $5.20B midpoint or pushes toward $5.40B — Q2 printed $5.463B, $63M above the high end of the guide and $263M above midpoint. This is the "sandbagging into accelerating demand" case the Q1 watch flagged, printed with room. The Bank of America-flagged H2 reversion risk is not showing in the Q3 guide, which extends the acceleration. Status: Resolved positively.
Industrial sequential trajectory in Q2 — ninth consecutive up-quarter or first plateau — the press release cites industrial as one of three end markets leading "broad growth" but doesn't disclose the specific sequential figure. Total revenue up 13% QoQ with all three cyclical end markets (industrial, data center, automotive) called out as leaders makes a ninth consecutive up-quarter for industrial the base-case reading, but the exact number wasn't printed. Status: Continue monitoring.
Gross margin progression on Q2's higher revenue base — gross margin printed 61.3% vs. the 58.5% floor the watch flagged, +330bps QoQ on revenue up $638M. That is ~86.7% incremental gross margin on the sequential dollar delta — running above the 75–85% ex-depreciation fall-through band management gave last quarter, though depreciation growth will net some of that out. Status: Resolved positively.
Pricing inflection in H2 — the press release doesn't quantify pricing contribution; management's Q1 framing was "won't help growth until H2 if demand sustains." With Q2 revenue up 23% YoY and volume/mix likely doing most of the work, pricing quantification will need to come from the transcript or the next print. Status: Continue monitoring.
Data center run-rate dollars disclosed explicitly — no explicit data center run-rate dollar figure in the press release. Data center is called out as a leader in the "broad growth" framing, but the specific $700M+ threshold the watch set can't be tested from the release alone. Status: Continue monitoring.
Silicon Labs deal — financing structure and accretion framework — no deal-detail disclosures in the Q2 press release. Deal is still pending regulatory approval with H1 2027 close targeted; financing structure, accretion framework, and pro-forma capital return implications remain undisclosed. Status: Continue monitoring.

What to watch into next quarter

Whether Q3 actual pushes toward the $6.15B high end — the guide midpoint of $5.90B implies +24.5% YoY, but Q1 and Q2 both printed above the high end of their respective guides. A Q3 print at or above $6.15B would put YoY growth at +30% and confirm the "management sandbagging into accelerating demand" pattern for a third consecutive quarter; a print below $5.90B would be the first real evidence the H2 reversion risk is materializing.

Gross margin holding 61%+ on Q3's higher revenue base — at $5.90B midpoint with ~86% incremental gross margin observed this quarter, GM should mechanically push toward 62% if the fall-through holds. A print below 60.5% would suggest depreciation growth or acquisition-preparation charges are eating the fall-through.

Underlying (ex-CHIPS Act) FCF trajectory — Q2 reported FCF benefited from $549M of CHIPS Act proceeds; underlying FCF was ~$2.19B. Whether CHIPS Act reimbursement continues at this cadence, and whether ex-CHIPS FCF margin stays in the 38–40% range, will drive the run-rate cash return math for the next four quarters.

Whether Q3 or Q4 transcript quantifies data center absolute revenue — data center has been called a growth leader for four consecutive quarters without a disclosed dollar figure. Management disclosing the run rate (or continuing to withhold it) will indicate whether they view the business as durable enough to break out formally.

Automotive sequential and YoY specifics — auto was newly added to the "broad growth led by" language this quarter but with no dollar breakout. If the Q3 transcript quantifies auto as growing double-digits YoY, that closes the last major end-market recovery gap; if it reverts to "mid-single-digit YoY" language, the promotion in this release was cosmetic.

FY 2026 guidance reinstatement — TI has now gone six consecutive quarters without a FY revenue/EPS guide. With Q2 running $263M above midpoint, Q3 guided up materially, and gross margin at 61%+, the "range of scenarios" posture is getting harder to justify. Continued withholding would suggest management still fears H2 reversion despite the print.

Silicon Labs deal — financing and pro-forma disclosures — the deal has now been outstanding for a full quarter with no detail. Absence of disclosure at the Q3 print would push structured commentary to the February capital-management event, delaying any read on FCF/share impact by another quarter.

Sources

  1. TXN Q2 FY2026 press release (8-K exhibit 99-ER), filed with SEC: https://www.sec.gov/Archives/edgar/data/97476/000009747626000148/q22026txnex99-eredgar.htm
  2. TXN Q1 FY2026, Q4 FY2025, Q3 FY2025, Q2 FY2025 Tapebrief coverage (prior brief archive).

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