TXN's Gross Margin Crosses 64% in Q3: Can It Improve Further?
What happened
Texas Instruments (TXN) reported a gross margin of 64.2% in the third quarter of 2026, up from 57.4% in the year-ago quarter and 61.4% in the previous quarter; Q3 gross profit rose 43% year over year to $3.89 billion while revenues increased 28% to $6.06 billion. The source attributes the improvement to higher sales volumes, better factory utilization, pricing and product mix. By market, industrial revenues rose more than 40% year over year, automotive grew at a mid-teens rate, and data center revenues surged about 95%. On its 300-millimeter wafer strategy, the company says an unpackaged chip built on 300-millimeter wafers costs approximately 40% less than one built on 200-millimeter wafers, and TXN has available cleanroom capacity in its Richardson, Sherman and Lehi facilities, with management planning to install additional equipment according to demand. For the fourth quarter of 2026, the Zacks Consensus Estimate indicates year-over-year growth of 37.7% for revenues and 94.5% for earnings (forecasts, not actuals). Peer comparison: ADI's fiscal Q3 2026 revenues rose 40% year over year to $4.02 billion, with GAAP gross margin up to 67.3% from 62.1% and adjusted gross margin at 72.5% from 69.2%, ahead of TXN's 64.2%; MCHP's fiscal Q1 2027 revenues grew 38% year over year to $1.49 billion, with GAAP gross margin improving to 63.2% from 53.6% and non-GAAP to 63.8% from 54.3%, supported by higher factory utilization and recovering demand. TXN shares have surged 78.1% year to date versus the Zacks Semiconductor - General industry's 22.6% growth; TXN trades at a forward P/E of 29.83 versus the industry average of 16.66. The Zacks Consensus Estimate for TXN's 2026 and 2027 earnings implies year-over-year increases of 62.4% and 24.7%, revised upward over the past seven days; TXN currently sports a Zacks Rank #1 (Strong Buy).
Impact and signal
Affected components and suppliers
Source and time
Source: Yahoo Finance — TXN · 10/28/2026 · View original source
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