Hold TXN: Avoid deployment at current levels; trim on breakdown, add only on confirmed $278.55 EMA reclaim with MACD bullish cross
Hold TXN core position. Do not add at $267-$274 or pre-emptively trim. Execute 25-40% trim on $269 high-volume breakdown. Initiate staged additions only after confirmed $278.55 10 EMA reclaim with MACD line-cross above signal, sized to portfolio risk budget. Prior 8/7 Overweight call lost 2.0%, reinforcing that constructive fundamentals do not override broken momentum; however, record revenue ($5.46B, +22.8% YoY), 35% ROE, 4x FCF inflection, $5.8B capital-return program, and intact $229 200 SMA support holding the core without forced selling.
| Position | Action |
|---|---|
| $269 breakdown with elevated volume | Trim 25-40% of position |
| $278.55 10 EMA reclaim with MACD line crossing above signal line | Add position in 2-3 tranches sized to portfolio risk budget |
The ~19% pullback from $332 to $269 is a mid-cycle correction in a structurally intact uptrend, not a bear market, as fundamentals are accelerating with record revenue, expanding margins, and 4x FCF growth, creating a mispricing opportunity at a forward P/E of 26.28 with a PEG of 1.22 and a $5.8B annual capital return floor.
| Indicator | Value | Signal |
|---|---|---|
| 200 SMA | 229.06 | bullish |
| 50 SMA | 291.52 | bearish |
| 10 EMA | 278.55 | bearish |
| RSI | 43.33 | neutral |
| MACD | -3.99 | bearish |
| MACD Signal | -4.29 | bearish |
| MACD Histogram | +0.30 | bullish |
| Bollinger Upper Band | 291.49 | neutral |
| Bollinger Middle Band | 279.63 | neutral |
| Bollinger Lower Band | 267.77 | neutral |
| ATR | 11.46 |
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: Confirmed break of $269 with elevated volume
Then: Trim 25-40% of core position
EV: Targets: $278 (10 EMA), $291 (50 SMA), $304-$310 (July consolidation), $332 (prior high); 1.5R to first target, 3R to second, 5R+ to prior high on stop at $266 · concedes: Bear is correct that TXN is below 10 EMA, 50 SMA, and MACD is negative; ~19% drawdown is real; Bear's trailing P/E of 41.55 is factually accurate (though forward P/E of 26.28 is more relevant); Sector contagion risk from Sandisk is a real, acknowledged risk; Margins cannot expand forever (though TXN is not at peak margins yet)
TXN is at peak operating margins in an industrial/auto upcycle, priced at 26.28x forward P/E with consensus EPS of $10.40 implying 58% YoY growth, in a late-cycle market with deteriorating momentum—the $273 entry is a trap, not a gift, with asymmetric downside risk to $200-210 (200 SMA) versus limited upside to $291 (50 SMA).
· concedes: Fundamentals and technicals disagree—but fundamentals win only at early-cycle, not at peak margins; AI capex spillover is real—but TXN is adjacent beneficiary at cents per AI capex dollar; GE Appliances deal is real—but one plant, one customer, one product category is noise on $19.5B base; $5.8B capital return is real—but not a structural put when buybacks are paused and dividend at risk in downcycle; No retail euphoria removes retail selling pressure—but institutions quietly distributing into strength is equally plausible; Strong Buy rank and record revenue are real—but same pattern at $332 in June is now 19% underwater
→ vs conservative: Mistakes routine mid-cycle correction for regime change by clinging to 200 SMA as downside target when structural floor is dramatically higher
→ vs conservative: Uses trailing P/E concern while ignoring forward P/E of 26.3 and 58% earnings growth trajectory
→ vs neutral: Mistakes discipline for paralysis by advocating waiting for 'confirmation' when triggers are already forming
→ vs neutral: Framing HOLD as waiting for perfect trigger rather than holding with conviction and scaling in
| neutral |
| Close | 273.43 | bearish |
Support: 267.77 · 269 · 229.06 | Resistance: 278.55 · 279.63 · 291.52 · 291.49
TXN is mid-cycle correcting within a structurally intact long-term uptrend. The stock has fallen ~19% from June 2026 highs near $332 to the Aug 3 swing low of $269.04, testing the Bollinger lower band at $267.77. Bearish signals include price below all three key MAs, MACD below zero, and a rolling over 50 SMA; however, bullish divergences are emerging (rising MACD histogram at +0.30) and RSI has not reached oversold territory below 30. The 200 SMA at $229.06 remains far below as major long-term support. HOLD recommended; new longs require momentum confirmation (MACD bullish crossover, RSI >50, close >$278.55). Key risk levels: stop at $269 swing low or ~$256 (1.5x ATR).
Market Capitalization
$249.71 B
Share Price (52-Week Range)
$152.73 – $334.03
50-Day Average Price
$293.42
200-Day Average Price
$230.69
Trailing P/E
41.55
Forward P/E
26.28
PEG Ratio
1.22
Price / Book
13.86
EPS (TTM)
$6.58
Forward EPS
$10.40
Dividend Yield
2.05%
Beta
1.33
Q2 2026 Revenue
$5.463 B
Q2 2026 Gross Profit
$3.352 B
Q2 2026 Gross Margin
61.4%
Q2 2026 Operating Income
$2.327 B
Q2 2026 Net Income
$1.980 B
Q2 2026 Diluted EPS
$2.14
Q1 2026 Revenue
$4.825 B
Q4 2025 Revenue
$4.423 B
Q3 2025 Revenue
$4.742 B
Q2 2025 Revenue
$4.448 B
Net Income TTM
$6.02 B
EBITDA TTM
$9.52 B
R&D Spend (Quarterly)
$510–535 M
Q2 2026 Total Assets
$35.88 B
Q2 2026 Cash & ST Investments
$7.00 B
Q2 2026 Inventory
$4.61 B
Q2 2026 Receivables
$2.52 B
Q2 2026 Total Debt
$14.05 B
Q2 2026 Net Debt
$10.39 B
Q2 2026 Stockholders' Equity
$18.01 B
Q2 2026 Current Ratio
4.86
Q2 2026 Working Capital
$12.51 B
Q2 2026 Operating CF
$2.703 B
Q2 2026 CapEx
$0.514 B
Q2 2026 Free Cash Flow
$2.189 B
Q2 2026 Dividends Paid
$1.295 B
TTM Free Cash Flow
$5.35 B
TTM Operating Cash Flow
$10.3 B
Profit Margin (TTM)
31.11%
Operating Margin (TTM)
42.58%
Gross Margin (TTM)
~58.3%
Return on Equity
35.18%
Return on Assets
13.06%
EBITDA Margin
~48.9%
Dividend Coverage from OCF
~2x
Net Debt / EBITDA
~1.1x
Treasury Stock
$41.94 B
Stock-based Compensation (Quarterly)
$127 M
Annualized Dividend Payout
~$5.16 B
Annualized Operating Cash Flow
~$10–11 B
Gross PPE Growth
$16.88B to $17.86B
Q2 2026 Buybacks
$27 M
Q1 2026 Buybacks
$158 M
Long-term Debt (Q2 2026)
$12.90 B
Revenue YoY (Q2'26 vs Q2'25)
+22.8%
EPS YoY
+51.8%
FCF Growth YoY (Q2)
~295%
Q1 2026 CapEx
$0.676 B
Q4 2025 CapEx
$0.925 B
Q3 2025 CapEx
$1.197 B
Q2 2025 CapEx
$1.305 B
Strengths
Concerns
TXN delivered Q2 2026 results showing strong operational momentum with revenue of $5.46B (+22.8% YoY), gross margin expansion to 61.4%, and EPS of $2.14 (+51.8% YoY), reflecting a meaningful upcycle in analog semiconductors. The company maintains a fortress balance sheet with a 4.86 current ratio, $7B in cash, and moderate net debt of $10.4B (1.1x EBITDA), while generating ~$5.4B TTM free cash flow as capex normalizes from peak $1.3B to $0.5B quarterly. The 2.05% dividend yield is well-supported by ~2x operating cash flow coverage, supplemented by aggressive share buybacks ($41.9B cumulative treasury stock). Key risks include elevated trailing P/E of 41.6x near 52-week highs, semiconductor cyclicality, and geopolitical/export control uncertainties, while the forward P/E of 26.3x implies ~58% earnings growth expectations that Q3 2026 earnings will need to validate.
Macro: Macro backdrop is constructive: S&P 500 closed at a record high, traders reducing rate hike bets with oil prices dropping, benign inflation data supporting equities. Prediction markets show 86% odds of no Fed rate cuts in 2026 (hawkish hold consensus), 8% odds of US recession by end-2026 (soft landing dominant view), and 18% odds of inflation exceeding 4.5% in 2026 (disinflation continues). Oil up 86% YTD presents a margin headwind for fab energy costs. Chevron-Microsoft West Texas AI data center deal highlights regional AI compute build theme indirectly lifting analog/power semis.