AI infrastructure Boom Fuels Texas Instruments’ (TXN) Rally

AI infrastructure Boom Fuels Texas Instruments’ (TXN) Rally

Tue, September 22, 2026 at 5:18 PM GMT+3 3 min read

• TXN -0.76%

Heartland Advisors, an investment management company, released its second-quarter 2026 investor letter for "Heartland Opportunistic Value Equity Strategy". The letter can be downloaded here. Second-quarter indices signaled a broadening market, but strong performance was mainly focused on a limited range of technology infrastructure and semiconductor stocks. The strategy returned 12.32% in the quarter, underperforming the Russell 3000 Value Index's 14.02% gain. While security selection was positive in nine out of eleven sectors, led by Communications, Materials, and Industrials, negative selection within the Technology sector offset these benefits. In this volatile market, the firm focuses on businesses with significant upside potential and downside protection, rather than predicting the duration of AI infrastructure developments. Please review the Fund's top five holdings to learn more about its key selections for 2026.

In its second-quarter 2026 investor letter, Heartland Opportunistic Value Equity Strategy highlighted Texas Instruments Incorporated (NASDAQ:TXN), a semiconductor manufacturer providing chips and solutions for electronics designers and manufacturers. On September 21, 2026, Texas Instruments Incorporated (NASDAQ:TXN) closed at $270.87 per share. Over the past month, Texas Instruments Incorporated (NASDAQ:TXN) returned 4.16%, while its shares gained 48.80% over the past 52 weeks. Texas Instruments Incorporated (NASDAQ:TXN) has a market capitalization of $247.37 billion.

Heartland Opportunistic Value Equity Strategy stated the following regarding Texas Instruments Incorporated (NASDAQ:TXN) in its Q2 2026 investor letter:

"A significant contributor to second-quarter performance was Texas Instruments Incorporated (NASDAQ:TXN), which joined the AI infrastructure narrative, though it still underperformed the Tech sector. Texas Instruments is the world's largest analog semiconductor manufacturer, selling low-cost chips to a variety of end markets, including the auto industry, communications equipment manufacturers, and other industrial customers. TXN's sales have recently been turbocharged by the AI infrastructure boom, as its chips support critical data center functions such as electrical power regulation and management. Its chips are also used in AI-driven devices, vehicles, and industrial equipment. Texas Instruments' data center power management revenues are up more than 90% year over year. Even if abnormally strong data center growth continues for years—and we expect it to—the industry will remain a relatively small share of total revenue through 2030.

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. As a result, higher fab utilization should drive attractive incremental profits and cash flow that can be returned to shareholders. After its recent rally, the business is now trading between our price target and intrinsic value. However, it is far less aggressively valued than many of its peers. During the quarter, we trimmed other Technology holdings that traded closer to our estimate of intrinsic value."

Texas Instruments Incorporated (NASDAQ:TXN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 111 hedge fund portfolios held Texas Instruments Incorporated (NASDAQ:TXN) at the end of the second quarter, up from 71 in the previous quarter. While we acknowledge the potential of Texas Instruments Incorporated (NASDAQ:TXN) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we discussed Texas Instruments Incorporated (NASDAQ:TXN) and shared Andvari Associates' views on the company. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.