Trim to Underweight; Execute into Rally at $275-280; Hard Stop at $255
Trim TXN 25-33% to underweight, executing into the $275-280 relief bounce rather than current weakness. Place hard stop at $255 on residual exposure. Do not add until Q3 2026 earnings in late October resolves directional bias. Re-engage on either confirmed beat-and-raise (Overweight add) or validated technical breakout above $276 with RSI > 50, MACD positive, and lower Bollinger reclaimed for 2 sessions. The 200 SMA at $231 provides 15.6% downside cushion but does not prevent a measured move to $200-210 if breached; avoid averaging into broken chart.
| Position | Action |
|---|---|
| Current position exceeds target underweight allocation | Trim 25-33% of position |
| Price rallies to $275-280 (10 EMA / prior support zone) | Execute trim into bounce buyer demand |
| Price approaches $255 on residual exposure | Hard stop - exit remaining position |
| Price below $260 | Avoid averaging down; do not add |
| 200 SMA at $231 breaks | Bear case target $200-210 - measured move risk |
TXN's 19% pullback is a mean-reversion entry point within a structural bull market, not a regime change; the spectacular fundamentals (35.2% ROE, 22.8% YoY revenue growth, 25.7x forward P/E, EPS trajectory to $10.40) make this a definitive BUY rather than a cautious HOLD.
| Indicator | Value | Signal |
|---|---|---|
| RSI (14) | 40.93 | bearish |
| MACD | −4.08 | bearish |
| MACD Signal | −3.90 | bearish |
| MACD Histogram | −0.19 | bearish |
| 10 EMA | $276.23 | bearish |
| 50 SMA | $289.88 | bearish |
| 200 SMA | $231.37 | bullish |
| ATR (14) | 11.14 | neutral |
| Bollinger Upper Band | $287.48 | neutral |
| Bollinger Middle Band (20 SMA) | $277.35 | neutral |
| Bollinger Lower Band |
This report is AI-generated for informational and educational purposes only and is not investment advice or a recommendation to buy or sell any security. Full disclaimer.
When: Close > $276 (10 EMA) on >7M volume with RSI > 50, MACD histogram positive, lower Bollinger reclaimed and held 2 sessions
Then: Tactical re-engagement on confirmed technical breakout
↩ rebuts: “Below lower Bollinger Band is a bearish breakdown signal”
EV: +8.6% to 50 SMA ($290); +19.9%+ to $320+ on Q3 print; risk/reward ~2-to-1 upside · concedes: 200 SMA really is below price and still rising (bull concedes long-term trend intact); Moving averages are stacked against price (technicals honestly weak); RSI is weak at 40.93; Bear case requires multiple compression AND earnings deceleration AND 200 SMA break—but all three must occur simultaneously
TXN is not a buy but a "don't catch this knife yet" — the stock is making lower lows despite bullish headlines, the recovery is already late-stage (Q2 was the 4th sequential improvement), the forward P/E of 25.7x is priced for perfection requiring new cycle peak EPS while dividend yield is uncompetitive versus Treasuries, and the risk/reward is asymmetrically bearish with 20%+ downside risk to $200-210 versus limited upside.
EV: -20%+ downside to $200-210 · concedes: FCF visibility is TXN's strongest macro point; The $5.8B in shareholder returns is real capital return discipline; TXN is not a broken business — it is a broken chart with consensus-priced-in upside; Q3 earnings in late October could validate $10.40 path if printed
→ vs conservative: 200 SMA at $231 is rearview mirror logic—waiting for that break means accepting a 35% peak-to-trough drawdown before exiting, not 20%
→ vs conservative: Fourth sequential revenue improvement signals cyclical peak risk, not launchpad momentum
→ vs neutral: Waiting for four confirmations (10 EMA at 276, RSI above 50, MACD positive, Bollinger reclaimed) means entering 5-8% after the bottom has already printed
| $267.23 |
| bearish |
| Drawdown from Peak | −19.6% | bearish |
Support: 267.23 · 255 · 260 · 231.37 | Resistance: 276.23 · 287.48 · 289.88
TXN exhibits a confirmed bearish trend with all major moving averages (10 EMA $276.23, 50 SMA $289.88) stacked above price, which closed below the lower Bollinger Band at $267.23—a statistically rare event occurring in less than 5% of sessions. RSI at 40.93 is bearish but not yet oversold (below 30), and MACD at −4.08 remains below its signal line (−3.90) with negative histogram (−0.19), indicating expanding bearish momentum. The 200 SMA at $231.37 remains the critical long-term support; a break below would signal regime change. ATR has contracted from ~15.2 to 11.14, suggesting the selloff is maturing, potentially setting up either a basing pattern or volatility expansion. Trade recommendation is HOLD: no new longs, tighten stops below $265, and wait for price to reclaim 10 EMA ($276.23) with RSI > 50 for reversal confirmation.
Market Cap
$244.25 B
P/E (TTM)
40.58
Forward P/E
25.70
PEG Ratio
1.23
P/B
13.56
EPS (TTM)
$6.59
Forward EPS
$10.40
Dividend Yield
2.09%
Beta
1.33
Book Value/Share
$19.72
52-Week High
$334.03
52-Week Low
$152.73
50-Day MA
$291.44
200-Day MA
$232.90
Revenue (TTM)
$19.45 B
EBITDA (TTM)
$9.52 B
Net Income (TTM)
$6.02 B
FCF (TTM)
$3.55 B
Gross Margin (TTM)
58.3%
Operating Margin (TTM)
42.6%
Net Margin (TTM)
31.1%
ROE
35.2%
ROA
13.1%
Total Assets
$35.88 B
Cash & ST Investments
$7.00 B
Inventory
$4.61 B
Total Debt
$14.05 B
Net Debt
$10.39 B
Stockholders' Equity
$18.01 B
Current Ratio
4.86
Q2 2026 Revenue
$5.46 B
Q2 2026 Gross Margin
61.4%
Q2 2026 Operating Income
$2.33 B
Q2 2026 Net Income
$1.98 B
Q2 2026 Diluted EPS
$2.14
Q2 2026 FCF
$2.19 B
2025 Annual Revenue
$17.68 B
2025 Gross Margin
57.0%
2025 Operating Income
$6.14 B
2025 Net Income
$5.00 B
2025 Diluted EPS
$5.45
2025 FCF
$2.60 B
2024 Annual Revenue
$15.64 B
2024 Gross Margin
58.1%
2024 Diluted EPS
$5.20
2024 FCF
$1.50 B
2022 Peak Diluted EPS
$9.41
Net Debt/EBITDA
1.09x
Dividends Paid (2025)
$5.00 B
CapEx (2025)
$4.55 B
Strengths
Concerns
Texas Instruments is a high-quality analog and embedded processing semiconductor franchise in mid-cyclical recovery, confirmed by Q2 2026 results showing 22.8% YoY revenue growth to $5.46B, gross margin expansion to 61.4%, and FCF of $2.19B. The stock trades near its 52-week high with a forward P/E of 25.7x implying ~58% EPS expansion to $10.40, supported by a fortress balance sheet (4.86x current ratio, $7.0B cash) and exceptional 35.2% ROE. The primary risk is valuation-driven: at a TTM P/E of 40.6x, the stock is vulnerable to multiple compression if the recovery stalls or if 2026 EPS fails to meet consensus expectations.
Macro: Fed is in hawkish hold mode with Polymarket pricing 86% probability of zero rate cuts in 2026; US recession odds at just 8% (down 0.5pp week-over-week). Energy shock is the live risk: oil up 36%, Strait of Hormuz closed, Brent near $92 — a potential margin headwind via fab power/logistics costs though TXN's US-centric fab footprint provides partial insulation. Semiconductors are a sector tailwind at +47.4% over 6 months vs S&P 500 +12.9%.