Texas Instruments is the anti-data center stock, this investor says

Goodreid Investment Counsel president and CEO Gordon Reid says Texas Instruments (Texas Instruments Stock Quote, Chart, News, Analysts, Financials NASDAQ:TXN) offers investors exposure to growing semiconductor demand without relying heavily on the AI data centre boom.

Speaking on BNN Bloomberg’s Market Call on Oct. 21, Reid said his firm recently added Texas Instruments to its portfolio as a way to diversify its technology exposure.

“When we bought Texas, we liked very much the fact that it was not data center-centric,” Reid said. He said only about 5% to 8% of the company’s business comes from data centres, while approximately 75% is tied to analog semiconductors.

Those chips are widely used in everyday electronics, automobiles and industrial equipment.

“We know in this world, everything from our microwave to our cars, virtually everything we touch has a semiconductor in it, and many of them are analog semiconductors,” Reid said.

He said Texas Instruments provides a natural hedge against portfolios concentrated in data centre infrastructure and communications technology. Reid also sees opportunities for growth as semiconductor use expands across industrial and commercial applications.

“One of the things that attracts us to Texas is that there’s an opportunity for operating margin expansion,” he said.

He explained that Texas Instruments can support additional revenue through its existing manufacturing and operating infrastructure, allowing more incremental sales to contribute directly to earnings.

“With a company like Texas Instruments, each incremental dollar is highly profitable,” Reid said. “Their fixed cost base is able to support more and more revenue. So that revenue flows right down to the bottom line.”

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