Buy this semiconductor maker as AI data center boom continues, Stifel says
Texas Instruments will outperform as it builds out its growing data center business and continues to capitalize on its analog offerings, according to Stifel. The investment firm upgraded the chipmaker to buy from hold. It also hiked its price target on shares to $250 from $215, implying 19.7% upside from Wednesday’s close. “Following an elevated 6-year investment cycle that constrained profitability and returns, we believe TXN is well positioned to capture share in the next analog upcycle and return to strong [free cash flow] generation,” analyst Tore Svanberg said in a note to clients. “TXN is entering a period where multiple tailwinds support the outlook.” In February, Texas Instruments agreed to buy chip designer Silicon Laboratories for $7.5 billion with the aim of becoming a bigger player in wireless connectivity chips. Those semiconductors are used in everything from smart appliances to vehicles. The agreement is one of several signs that Texas Instruments is expanding its business beyond analog chips for electronic equipment — a likely boon for investors in its stock, according to Stifel. “Our analysis suggests the [Silicon Labs] acquisition could be more accretive than originally modeled,” Svanberg wrote. “By accounting for potential (i) revenue synergies and (ii) the retirement of $7bn in acquisition debt using excess [free cash flow], we project the transaction could drive +10.5% [earnings per share] accretion by 2030E.” The deal offers synergy for Texas Instruments’ growing data center business, which is also likely to boost the company’s shares, according to the analyst. Earlier this year, the semiconductor company reported a 70% increase in data center orders in 2025 versus the year prior. And in March, Texas Instruments unveiled in a statement its new 800V direct current power architecture solution for next-generation AI data centers. Data center demand has been robust over the past few years, largely due to continued development and proliferation of artificial intelligence. As of late December, more than $61 billion had flowed into the data center market in 2025, marking a slight increase from the year prior, per S & P Global data. “As power demand and delivery emerge as bottlenecks for next-generation [data center] infrastructure, we believe TXN is well positioned to capture this rising demand by leveraging its 300mm domestic capacity expansion and high-efficiency product portfolio to ensure a dependable supply,” Svanberg wrote. The analyst added that he expects the company’s data center segment to make up 20% of its total sales by 2028 or 2029. However, the semiconductor firm’s analog hardware business is also likely to gain ground, according to Stifel. “TXN missed out on potential share gain opportunities during the CY20A-CY22A cyclical upswing due to capacity constraints,” Svanberg said. “This justifies the elevated CapEx cycle TXN entered to expand its 300mm capacity, which we believe could position the company to expand its analog market share.” Texas Instruments stock has risen 20% in the year to date, vastly outperforming the overall market. TXN YTD mountain Texas Instruments shares are up this year.