In the dynamic world of semiconductors, two giants, Texas Instruments Incorporated (TXN) and STMicroelectronics N.V. (STM), are vying for investor attention. Both companies operate within the same industry and showcase significant market overlap, yet they adopt distinct innovation strategies. Texas Instruments focuses heavily on analog and embedded processing solutions, while STMicroelectronics excels in automotive and sensor technologies. In this article, I will guide you through a comparative analysis of these two companies to help you determine which presents a more compelling investment opportunity.
Table of contents
Company Overview
Texas Instruments Incorporated Overview
Texas Instruments (TXN) is a leading player in the semiconductor industry, renowned for its innovative designs and manufacturing of semiconductors utilized by electronic designers and manufacturers globally. The company operates through two main segments: Analog and Embedded Processing. The Analog segment focuses on power management solutions and signal chain products, serving diverse end markets such as automotive, industrial, and personal electronics. Meanwhile, the Embedded Processing segment offers microcontrollers and digital signal processors tailored for specific computing tasks. Founded in 1930 and headquartered in Dallas, TX, Texas Instruments emphasizes efficiency and reliability, continually adapting to the evolving needs of its customer base.
STMicroelectronics N.V. Overview
STMicroelectronics (STM) stands as a prominent semiconductor manufacturer, operating across multiple regions including Europe, the Americas, and Asia Pacific. The company is structured into three main segments: Automotive and Discrete Group, Analog, MEMS, and Sensors Group, and Microcontrollers and Digital ICs Group. STMicroelectronics produces a wide array of semiconductor products, including automotive integrated circuits, MEMS sensors, and custom analog ICs. Established in 1987 and headquartered in Schiphol, the Netherlands, STMicroelectronics is focused on advancing technology for automotive, industrial, and consumer electronics markets, driving innovation and sustainability.
Key similarities and differences
Both Texas Instruments and STMicroelectronics are key players in the semiconductor industry, focusing on various electronic applications. However, TXN emphasizes analog and embedded processing solutions, while STM diversifies into automotive and MEMS technologies. Their varied product offerings reflect distinct strategic focuses, catering to different market demands within the tech ecosystem.
Income Statement Comparison
The following table presents a comparison of the most recent income statements for Texas Instruments Incorporated and STMicroelectronics N.V., highlighting key financial metrics for analysis.
| Metric | Texas Instruments (TXN) | STMicroelectronics (STM) |
|---|---|---|
| Market Cap | 153B | 20.5B |
| Revenue | 15.6B | 13.3B |
| EBITDA | 7.5B | 3.7B |
| EBIT | 5.9B | 1.9B |
| Net Income | 4.8B | 1.6B |
| EPS | 5.24 | 1.73 |
| Fiscal Year | 2024 | 2024 |
Interpretation of Income Statement
In 2024, Texas Instruments saw a decline in revenue to 15.6B from 17.2B in 2023, resulting in a net income of 4.8B, down from 6.5B. This indicates a significant drop in profitability, leading to a reduced EPS of 5.24. Conversely, STMicroelectronics experienced a decline in revenue as well, dropping from 17.3B to 13.3B, which also affected its net income, down to 1.6B from 4.2B. Both companies faced challenges, with margins tightening, but Texas Instruments remains more robust in terms of absolute income figures, highlighting its competitive positioning in the semiconductor industry.
Financial Ratios Comparison
Below is a comparative table showing the most recent revenue and financial ratios for Texas Instruments Incorporated (TXN) and STMicroelectronics N.V. (STM).
| Metric | TXN | STM |
|---|---|---|
| ROE | 28.39% | 8.92% |
| ROIC | 14.75% | 6.34% |
| P/E | 35.63 | 14.43 |
| P/B | 10.12 | 1.29 |
| Current Ratio | 4.12 | 3.11 |
| Quick Ratio | 2.88 | 2.37 |
| D/E | 0.80 | 0.18 |
| Debt-to-Assets | 38.29% | 12.80% |
| Interest Coverage | 10.76 | 19.72 |
| Asset Turnover | 0.44 | 0.54 |
| Fixed Asset Turnover | 1.38 | 1.22 |
| Payout Ratio | 99.92% | 18.50% |
| Dividend Yield | 2.80% | 1.28% |
Interpretation of Financial Ratios
In comparing TXN and STM, TXN displays significantly higher profitability ratios (ROE and ROIC), indicating better returns on equity and capital. However, its P/E and P/B ratios suggest it might be overvalued relative to STM. TXN’s current ratio indicates strong liquidity, while STM shows a more conservative debt profile with a lower D/E ratio. TXN’s high payout ratio raises concerns about sustainability, while STM’s lower payout allows for more reinvestment. Overall, TXN presents growth potential, yet carries higher risks, while STM demonstrates stability.
Dividend and Shareholder Returns
Texas Instruments (TXN) pays an annual dividend of $5.26 per share, with a payout ratio of approximately 99.9%. While this high ratio suggests strong commitment to returning capital, it raises concerns about sustainability. Conversely, STMicroelectronics (STM) offers a modest dividend of $0.32 per share, with a low payout ratio of 5.3%, reflecting its growth phase and reinvestment strategy. Both companies engage in share buybacks, indicating a focus on shareholder value. Overall, TXN’s approach may pose risks, while STM’s strategy aligns with sustainable long-term value creation.
Strategic Positioning
Texas Instruments (TXN) holds a significant market share in the analog and embedded processing segments within the semiconductor industry, leveraging its extensive product range to cater to diverse markets. In comparison, STMicroelectronics (STM) competes aggressively with its varied offerings in automotive, industrial, and consumer electronics. Both companies face competitive pressures from emerging players and technological disruptions. However, TXN’s established brand and robust portfolio position it favorably against STM in high-margin markets, while STM’s innovation in MEMS and sensors provides a competitive edge in niche applications.
Stock Comparison
In this section, I will discuss the weekly stock price movements of Texas Instruments (TXN) and STMicroelectronics (STM) over the past year, highlighting key price dynamics and trading behavior.
Trend Analysis
Texas Instruments (TXN): Over the past year, TXN has experienced a price change of +1.92%. This indicates a bullish trend; however, it is important to note that the trend has shown signs of deceleration. The stock reached a notable high of 221.25 and a low of 147.6, with a standard deviation of 16.88 suggesting moderate volatility in its price movements.
In the recent period from September 14 to November 30, 2025, TXN’s price has decreased by -7.85%, with a standard deviation of 9.08, indicating increased volatility. The trend slope during this timeframe is slightly negative at -2.28.
STMicroelectronics (STM): Conversely, STM has faced a significant price decline of -48.46% over the past year, categorizing it as a bearish trend. The stock’s highest price was 47.17, while it fell to a low of 18.49. The standard deviation of 8.0 suggests a relatively stable price movement compared to TXN.
In the recent analysis period from September 14 to November 30, 2025, STM’s price showed a further decline of -11.27%, with a standard deviation of 2.37, indicating lower volatility. The trend slope is also negative at -0.54, reinforcing the bearish outlook.
Analyst Opinions
Recent analyst recommendations for Texas Instruments (TXN) and STMicroelectronics (STM) suggest a cautious but optimistic outlook. Analysts rate TXN with a “B” grade, highlighting its strong return on equity and assets, making it a solid hold for potential investors. In contrast, STM received a “B+” rating, praised for its balanced financial metrics and growth potential. The consensus for both stocks leans towards a “buy” for the current year, reflecting confidence in their operational capabilities and market positions.
Stock Grades
In the current market landscape, stock ratings play a crucial role in guiding investment decisions. Here are the latest grades for Texas Instruments Incorporated and STMicroelectronics N.V.
Texas Instruments Incorporated Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Susquehanna | Maintain | Positive | 2025-10-22 |
| Wells Fargo | Maintain | Equal Weight | 2025-10-22 |
| Truist Securities | Maintain | Hold | 2025-10-22 |
| Rosenblatt | Maintain | Buy | 2025-10-22 |
| Goldman Sachs | Maintain | Buy | 2025-10-22 |
| JP Morgan | Maintain | Overweight | 2025-10-22 |
| Cantor Fitzgerald | Maintain | Neutral | 2025-10-22 |
| Stifel | Maintain | Hold | 2025-10-22 |
| TD Cowen | Maintain | Buy | 2025-10-22 |
| Mizuho | Downgrade | Underperform | 2025-10-20 |
STMicroelectronics N.V. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| TD Cowen | Maintain | Buy | 2025-10-24 |
| Susquehanna | Maintain | Positive | 2025-10-22 |
| Susquehanna | Maintain | Positive | 2025-07-25 |
| Susquehanna | Maintain | Positive | 2025-07-22 |
| Baird | Upgrade | Outperform | 2025-07-22 |
| Jefferies | Upgrade | Buy | 2025-02-19 |
| Bernstein | Downgrade | Market Perform | 2025-02-05 |
| Susquehanna | Maintain | Positive | 2025-01-31 |
| Barclays | Downgrade | Underweight | 2025-01-22 |
| JP Morgan | Downgrade | Neutral | 2024-12-09 |
Overall, both companies show a trend of maintaining positive and strong grades, with STMicroelectronics experiencing some upgrades amidst a few downgrades. This suggests a generally favorable sentiment towards these stocks, though investors should remain cautious, especially in light of recent downgrades.
Target Prices
The current consensus target prices from reliable analysts for Texas Instruments and STMicroelectronics indicate a mix of bullish and cautious outlooks.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Texas Instruments (TXN) | 245 | 145 | 190.45 |
| STMicroelectronics (STM) | 45 | 22 | 33.38 |
For Texas Instruments, the consensus target price of 190.45 suggests a moderate upside from the current price of 168.15, while STMicroelectronics’ consensus of 33.38 reflects a significant potential increase from its current price of 22.99. Overall, analysts appear optimistic but recommend caution in this sector.
Strengths and Weaknesses
Below is a comparative analysis of the strengths and weaknesses of Texas Instruments Incorporated (TXN) and STMicroelectronics N.V. (STM).
| Criterion | Texas Instruments (TXN) | STMicroelectronics (STM) |
|---|---|---|
| Diversification | Strong with various sectors including industrial, automotive, and personal electronics | Moderate with a focus on automotive, analog, and digital ICs |
| Profitability | High net profit margin at 37.2% | Lower net profit margin at 24.4% |
| Innovation | Strong focus on R&D and product development | Increasing investment in new product lines and technologies |
| Global presence | Established presence in North America and Asia | Strong presence in Europe and Asia |
| Market Share | Significant in analog and embedded processing | Growing share in automotive and industrial sectors |
| Debt level | Moderate debt-to-equity ratio of 0.664 | Low debt-to-equity ratio of 0.182 |
Key takeaways include Texas Instruments’ strong profitability and diversification across various sectors, compared to STMicroelectronics’ lower profitability but a solid focus on automotive and industrial markets. Both companies show strengths in innovation, but TXN leads in global reach and market share.
Risk Analysis
The following table outlines key risks associated with Texas Instruments Incorporated (TXN) and STMicroelectronics N.V. (STM) based on the most recent data available.
| Metric | Texas Instruments (TXN) | STMicroelectronics (STM) |
|---|---|---|
| Market Risk | Moderate | Moderate |
| Regulatory Risk | Moderate | High |
| Operational Risk | Low | Moderate |
| Environmental Risk | Low | Moderate |
| Geopolitical Risk | Moderate | High |
In summary, both companies face moderate market and geopolitical risks, with STMicroelectronics facing a higher regulatory risk due to its global operations. Recent supply chain disruptions and regulatory changes could significantly impact their performance.
Which one to choose?
When comparing Texas Instruments Incorporated (TXN) and STMicroelectronics N.V. (STM), several fundamental factors come into play. TXN exhibits stronger profitability margins, with a net profit margin of 30.7% compared to STM’s 12.4%. In terms of valuation, TXN has a price-to-earnings (P/E) ratio of 35.6, while STM’s stands at 14.4, suggesting that TXN is more expensive relative to its earnings. Analysts rate TXN as a “B” and STM as “B+,” with targets suggesting moderate upside for both. However, TXN’s stock trend is bullish, while STM is in a bearish phase, with a significant price drop of 48.5% recently.
For growth-focused investors, TXN may be more attractive due to its higher margins and consistent performance. Conversely, conservative investors might find STM appealing for its lower valuation and potential recovery.
Specific risks include competition in the semiconductor sector, which affects both companies’ pricing power and margins.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of Texas Instruments Incorporated and STMicroelectronics N.V. to enhance your investment decisions:
