Texas Instruments Rides AI Boom: Data Center Revenue Up 90%

Texas Instruments' data center power management revenue has grown more than 90% year over year, according to Heartland Advisors' second-quarter 2026 investor letter for its Opportunistic Value Equity Strategy. That figure anchors a rally that has lifted the analog chipmaker's shares 48.80% over the past 52 weeks.

On September 21, 2026, Texas Instruments (NASDAQ:TXN) closed at $270.87 per share, giving the company a market capitalization of $247.37 billion. Over the past month, the stock returned 4.16%.

A Rare Move for a Company of Its Size

Heartland's letter, which detailed a quarter in which the strategy returned 12.32% and underperformed the Russell 3000 Value Index's 14.02% gain, identified Texas Instruments as a significant contributor to performance. The firm noted that second-quarter indices signaled a broadening market, but strong performance remained concentrated in a limited range of technology infrastructure and semiconductor stocks.

The letter praised the stock's ascent in unusually direct terms:

"Although the stock rose more than 70% through late June, which is extremely rare for a company of TXN's size and maturity, we believe there are several operational inflections that could continue to drive TXN's improved relative performance versus its analog semiconductor peers and the broader Technology sector; most importantly, the company has passed peak capital expenditures as part of a multi-year fabrication-capacity buildout."

What Is Driving the Numbers

Texas Instruments is the world's largest analog semiconductor manufacturer, selling low-cost chips to end markets including the auto industry, communications equipment makers, and industrial customers. The AI infrastructure boom has turbocharged sales because its chips support critical data center functions such as electrical power regulation and management. The same components appear in AI-driven devices, vehicles, and industrial equipment.

Heartland sees limits to how far that tailwind stretches. Even if abnormally strong data center growth continues for years, which the firm expects, the segment will remain a relatively small share of total revenue through 2030, the letter states.

Capital Cycle Turn Provides the Margin of Safety

The more consequential story for investors may be the capital expenditure cycle. Because Texas Instruments has passed peak capex in its multi-year fabrication buildout, higher fab utilization should drive attractive incremental profits and cash flow that the company can return to shareholders, according to Heartland.

Valuation discipline framed the firm's positioning. After the rally, Texas Instruments trades between Heartland's price target and its estimate of intrinsic value. The letter adds: "However, it is far less aggressively valued than many of its peers."

That relative cheapness prompted portfolio action. "During the quarter, we trimmed other Technology holdings that traded closer to our estimate of intrinsic value," the letter states.

Context From the Quarter

The Texas Instruments position sat within a broader portfolio that delivered positive security selection in nine of eleven sectors, led by Communications, Materials, and Industrials. Negative selection within Technology offset those gains and kept the strategy behind its benchmark.

Heartland's approach in the current market is explicitly valuation-driven rather than macro-timed. The firm wrote that it focuses on businesses with significant upside potential and downside protection, rather than predicting the duration of AI infrastructure developments.

For Texas Instruments, the question investors will watch is whether post-capex free cash flow conversion can sustain the stock's outperformance even as data center demand, by Heartland's own estimate, remains a small slice of revenue through the end of the decade.