Texas Instruments Incorporated (NASDAQ:TXN) is among Goldman Sachs’ top semiconductor stock picks. On January 27, Evercore ISI reiterated an Outperform rating on Texas Instruments (NASDAQ:TXN) with a $226 price target, citing underweight investor positioning in analog and microcontroller semiconductors ahead of Q4 earnings and potential data center market share gains in 2026. Wall Street Backs Texas Instruments (TXN) Ahead of Q4 Earnings and Capital Management Day The firm noted TXN’s underperformance ve ...

Core Viewpoint - Advanced Micro Devices (AMD) has issued ambitious growth projections, aiming for significant revenue increases and a potential market cap of $1 trillion by 2028, despite currently lagging behind Nvidia in the AI sector [1][2]. Company Overview - AMD's current market cap is approximately $360 billion, requiring its stock to nearly triple to reach the $1 trillion mark by 2028 [2]. - The company has a more diversified product lineup compared to Nvidia, which includes central processing units, embedded processors, and various data center equipment, potentially providing stability against market fluctuations [2]. Financial Performance - In the third quarter of fiscal 2026, Nvidia generated $51.2 billion from data center equipment, while AMD's data center revenue was $4.3 billion out of a total of $9.3 billion [3]. - AMD's revenue for the past 12 months was $32 billion, with projections indicating it could reach approximately $84.9 billion by 2028 at a 35% compound annual growth rate (CAGR) [7]. Growth Projections - AMD anticipates a greater than 60% CAGR in data center revenue over the next five years, significantly outpacing its recent growth [5]. - The company expects an overall revenue CAGR of 35% and adjusted earnings per share exceeding $20 [7]. Profitability Expectations - AMD projects an adjusted operating margin greater than 35%, a substantial increase from the current 10%, which could lead to an estimated profit margin of 25% by 2028 [8]. - At $84.9 billion in revenue, this would translate to approximately $21.2 billion in profits [8]. Valuation Insights - Currently, AMD's stock trades at over 110 times earnings, which is considered unrealistic; a more reasonable valuation would be around 40 times earnings, potentially valuing the company at $848 billion [9]. - If growth rates are slightly higher in the early years or if a higher valuation is applied, AMD could reach a $1 trillion valuation by 2028, with a more conservative estimate suggesting it may achieve this by 2030 [9][10].

Group 1 - Texas Instruments Incorporated (NASDAQ:TXN) reported Q2 2025 financial results with revenue of $4.45 billion, reflecting a 16% year-over-year increase [2] - The company announced a quarterly cash dividend increase of 4.4%, raising it from $1.36 to $1.42 per share [2] - The stock has a dividend yield of 3.06%, indicating a commitment to returning value to shareholders [4] Group 2 - Analyst opinions on Texas Instruments are mixed, with ratings split between Buy and Hold, and a consensus average upside potential of 18.47% [3] - Texas Instruments is recognized as one of the best Fortune 500 dividend stocks to invest in [1] - The company is a global leader in the design and manufacture of analog chips and embedded processors, with a history of significant innovations [4]

Core Viewpoint - AMD presents a potential investment opportunity as a competitor to Nvidia, offering a balance of value and growth despite its recent performance challenges [1][2]. Group 1: Company Comparison - Nvidia dominates the AI computing market, while AMD is seen as a viable alternative due to its broader product range, including CPUs and embedded processors [4]. - AMD's recent performance has lagged behind Nvidia, primarily due to its less focused approach on GPUs and data centers [5]. - AMD's revenue from its data center segment was $3.2 billion in Q2, while its Client and Gaming division generated $3.6 billion, and Embedded contributed $0.8 billion [6]. Group 2: Market Dynamics - A downturn in the data center GPU market could benefit AMD, as its diversified product offerings may lead to better performance compared to Nvidia [5]. - The potential loss of data center construction could significantly impact AMD, as nearly half of its revenue base would be affected [7]. - AMD's recent loss of its Chinese export license for MI308 chips resulted in an operating loss for its Data Center segment in Q2 [9]. Group 3: Export and Profitability - AMD and Nvidia may resume chip exports to China with a 15% export tax, but AMD's lower profit margins compared to Nvidia could limit the profitability of this arrangement [10]. - Despite the challenges, AMD's stock trades at a premium compared to Nvidia, with a higher forward price-to-earnings (P/E) ratio [12].

Core Viewpoint - Nvidia is significantly outperforming AMD in the data center market, but AMD may still present a valuable investment opportunity due to its current low valuation and potential growth in data center revenue [1][2][5]. Data Center Market Insights - Nvidia predicts that data center infrastructure spending will reach $1 trillion annually by 2028, with the potential for Nvidia to capture about 25% of that market [3]. - AMD's data center revenue was approximately $12.6 billion in 2024, which is about one-tenth of Nvidia's $115 billion in fiscal 2025 [3]. - AMD's data center sales could approach $25 billion over the next four years, indicating significant growth potential [3]. AMD's Financial Performance - AMD's total trailing revenue is currently $25.8 billion, suggesting substantial revenue growth in the coming years, even without considering growth from its other divisions [4]. - AMD's stock is trading at a forward P/E ratio of 22, which is competitive with the S&P 500's forward P/E of around 21 [6][8]. - The data center division reported an operating margin of 27.7%, which is the second-best among its divisions, indicating strong profitability potential [9][10]. Growth Potential and Investment Thesis - If AMD's data center revenue growth outpaces other divisions, its operating margins will improve, leading to faster profit growth [10]. - The combination of revenue growth and improving margins could significantly enhance AMD's stock performance, making current prices an attractive entry point for investors [11].