AI infrastructure Boom Fuels Texas Instruments’ (TXN) Rally

Heartland Advisors, an investment management firm, detailed its second-quarter 2026 investor letter for the Heartland Opportunistic Value Equity Strategy in its recent publication. The letter can be accessed here. The second quarter's indices indicated a broadening market, but strong performance was largely confined to specific technology infrastructure and semiconductor stocks.

The strategy generated a 12.32% return in the quarter, slightly falling short of the Russell 3000 Value Index's 14.02% gain. While the strategy showed positive performance in nine of eleven sectors, led by Communications, Materials, and Industrials, a negative selection within the Technology sector counterbalanced these gains. In this fluctuating market, Heartland Advisors concentrates on companies with substantial upside potential and downside protection, rather than attempting to predict the lifespan of AI infrastructure advancements.

The firm highlighted Texas Instruments Incorporated (NASDAQ:TXN), a semiconductor manufacturer, in its Q2 2026 investor letter. On September 21, 2026, TXN closed at $270.87 per share. Over the past month, TXN's share price increased by 4.16%, while its stock gained 48.80% over the past 52 weeks. With a market capitalization of $247.37 billion, Heartland Advisors noted that TXN significantly contributed to the second-quarter performance, joining the AI infrastructure narrative.

However, TXN still underperformed the Tech sector. The company, the world's largest analog semiconductor manufacturer, benefits from the AI infrastructure boom, as its chips support essential data center functions like electrical power regulation and management. TXN's revenue from data center power management has surged by over 90% year over year.

While the stock surged more than 70% through late June, which is uncommon for a company of TXN's size and maturity, Heartland Advisors believes there are several operational inflections that may further boost TXN's relative performance compared to its analog semiconductor peers and the broader Technology sector. These inflections include the company having surpassed peak capital expenditures as part of a multi-year fabrication-capacity buildout, leading to potential attractive incremental profits and cash flow for shareholders.

Despite its recent rally, TXN is now trading between the firm's price target and intrinsic value, being less aggressively valued than many of its peers. However, Heartland Advisors acknowledges Texas Instruments as an investment opportunity but believes other AI stocks offer greater upside potential and lesser downside risk. As of the second quarter, 111 hedge fund portfolios held TXN, up from 71 in the previous quarter.

Heartland Advisors suggests consulting their free report on the best short-term AI stock for an extremely undervalued AI stock that may also benefit significantly from Trump-era tariffs and the onshoring trend.