Will Texas Instruments' 2027 Pricing Strategy Lift Profitability?

What happened

Texas Instruments (TXN) is entering its 2027 customer pricing discussions with an opportunity to improve profitability. During its third-quarter 2026 earnings call, management said pricing was flat year over year in the first half of 2026, but some increases emerged in the second half, mainly in Analog. The company typically discusses prices annually; for 2027 it is considering customer demand and the value of securing reliable supply, and said tight capacity, particularly outside China and Taiwan, may strengthen its position, with customers seeking guaranteed supply possibly accepting higher prices. Third-quarter 2026 revenues climbed 28% year over year to $6.06 billion, gross profit increased 43% to $3.887 billion, and gross margin reached 64.2% versus 57.4% a year earlier; the company attributed the improvement mainly to increased revenues, higher pricing, improved factory utilization and a better product mix. However, pricing gains are not guaranteed: customers may resist increases if chip supply improves or demand weakens, and higher prices could affect customer relationships and order volumes. TXN has not disclosed the expected size or timing of 2027 price changes and plans to provide more details with its full-year 2026 results in January next year. Among competitors: ADI's third-quarter fiscal 2026 revenues jumped 40% year over year to $4.02 billion, with non-GAAP gross margin expanding 330 basis points to 72.5%; ADI has not disclosed a specific 2027 pricing target. MCHP's second-quarter fiscal 2027 revenues increased 42% year over year to $1.62 billion, with non-GAAP gross margin rising to 66.5% from 56.7%, driven mainly by higher revenues, increased factory utilization and benefits from pricing changes implemented during the quarter. TXN shares have surged 78.1% year to date versus the Zacks Semiconductor - General industry's 4.5% decline; TXN trades at a forward P/E of 28.34 versus the industry average of 12.86; the Zacks Consensus Estimate implies 2026 and 2027 earnings growth of 64.6% and 25.3% year over year, with estimates revised upward over the past seven days; TXN currently sports a Zacks Rank #1 (Strong Buy).

Impact and signal

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Source and time

Source: Yahoo Finance — TXN · 11/12/2026 · View original source