The Quiet Godfather of U.S. Chips Just Went All In With $60B… Why Doesn’t Anyone Care?

The Quiet Godfather of U.S. Chips Just Went All In With $60B… Why Doesn’t Anyone Care?

Let’s take a break from Amazon and their AI-powered headline storm for a moment. Between cloud upgrades, chip announcements, a growing rivalry with Nvidia, and now the report about their robotaxis… it’s easy to think the entire market centers around Jeff Bezos. But not everything in the market is about crazy innovations. Let’s talk about something a little less sexy, a little more… “dad investor.” A “dad stock” that’s one of the biggest holdings in nearly every dividend ETF on the planet (and really needs to kick its a** into gear before it’s too late).

U.S. Chips

I’m talking about Texas Instruments… and this year, TXN stock is up a glorious… wait for it… 1%. That’s it. One percent. Basically the same return you’d get if your grandma found a $5 bill in her recliner and decided to invest it in coupons. And for a company sitting on one of the most aggressive U.S. chip expansion plans in history, that’s… puzzling. But today, TI (that’s Texas Instruments, not T.I. the rapper… though both are known for blowing stacks) dropped a little announcement: they’re planning to spend $60 billion building new chip factories across Texas and Utah. The move includes two brand spanking new fabs in Sherman, TX, continued expansion in Richardson, and revamping that lab in Lehi, Utah (that’s not doing too hot).

This marks one of the largest domestic manufacturing investments in the history of the semiconductor industry… and a clear signal that TI is betting heavily on long-term demand for analog and embedded chips, which power everything from industrial equipment to vehicles, consumer electronics, and medical devices.

U.S. Chips

Despite this historic investment (hailed by the Commerce Secretary himself as “supporting U.S. chip manufacturing for decades”) Wall Street gave TI the same enthusiasm I gave a free sample of unsalted almonds at the local Costco.

And it’s not that hard to calculate (pun intended)... because the dividend crowd wants returns. Not ribbon-cutting ceremonies. And TI’s 37x P/E ratio is sitting awkwardly next to declining earnings over the past year and a 40% drop over the last three years. They’ve been telling investors, “Don’t worry, the spending is almost done. We’re in the final innings.” But those final innings have been dragging on forever.

U.S. Chips

To be fair, they did say 70% of the spending spike is behind them. CEO Haviv Ilan said that in April. And once the capex marathon wraps up, TI has promised to enter back into “sugar daddy mode,” pledging to return all excess cash to shareholders via dividends and buybacks.

Now that I’ve got all the jokes out of the way… I think Wall Street might be sleeping on this one considering Texas Instruments holds the top market share in analog chips. And as U.S.-China tensions escalate, that matters. Beijing has been pouring resources into competing in the analog space, especially since they’re restricted from accessing high-end processors. On the other hand, TI is planting its distinct red and white flag across the U.S….and doing it with government support.\

U.S. Chips

And I’m not alone, some of the nerdy analysts think this spend-a-thon might actually pay off… projecting 16% earnings growth annually over the next three years, which would leave the broader market’s 10% in the mud. Once TI finishes pouring concrete and turns the lights on in all these fabs, it’s expected to shift back into cash-return mode (to shareholders, that is).

Right now, Texas Instruments’ stock might be moving slower than Christmas, but its $60 billion commitment could set the stage for a very profitable back half of the decade. Make no mistake about it… when the dividend growth resumes, and that cash pipeline opens up again, the ETF crowd will likely come crawling back.

At the time of publishing this article, Stocks.News holds positions in Amazon as mentioned in the article.