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Call sheet · Q2'26

Texas Instruments (TXN)

Q2'26 earnings call · held 2026-07-22 · compared with the Q1'26 call · management-credibility review
6/12
Disclosure score
1 high, 4 medium, 1 low flags
Financial quality
Bottom line
The Street sees a beat, but TI is eating inventory to meet demand while assembly/test bottlenecks force emergency CapEx redeployment, explaining why Rafael is suddenly 'biased to the high end' of CapEx despite having 'almost full' Sherman cleanrooms empty. The data center story is losing steam, morphing from precise '90% growth' to vague 'doubled' while management pivots to discussing 'racks' not revenue. The binding constraint has shifted from wafer capacity to backend assembly, catching management flat-footed: 'we are seeing more and more bottlenecks in the market that are popping up.' My view changes if Q3 shows inventory rebuild above 200 days while maintaining growth, proving they've solved the AT bottleneck.

The 30-second version

  • The sleeper: TI just admitted they're redirecting CapEx from wafer to assembly/test because backend is the new bottleneck
  • The obvious beat masks a quality problem: inventory consumption drove Q2, not production
  • Data center's 'double' is losing precision: from specific '90% YoY' in Q1 to vague 'doubled' in Q2

What changed this quarter

MetricQ1'26Q2'26Change
Revenue$4.8B (+19% YoY)$5.5B (+23% YoY)+13% sequential acceleration
EPS$1.68$2.14+27% sequential surge
Gross Margin58%61%+340 bps expansion
Operating Margin37%42%+500 bps improvement
Industrial Revenue+30% YoY, +20% seq+30% YoY, +10% seqSequential deceleration by half
Automotive RevenueMid-single digits YoY, flat seqMid-teens YoY, upper single seqFinally inflected positive
Data Center Revenue+90% YoY, +25% seq'Doubled' YoY, +20% seqGrowth decelerating, precision lost
Personal ElectronicsFlat YoY, low single seqFlat YoY, upper single seqModest sequential improvement
Inventory$4.7B (209 days)$4.6B (196 days)13 days consumption
Free Cash Flow (TTM)$4.4B$6.5B+48% surge but includes $1.6B CHIPS

Accountability tracked

6 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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