Tactical trim of 20–25% of TXN now; retain smaller core with $228 stop and re-evaluate on momentum recovery or support defense
TXN offers a high-quality franchise with strong Q2 fundamentals but near-term risk/reward favors an Underweight position due to approximately 24x forward earnings versus an 18–20x 10-year range, confirmed downtrend below key moving averages with bearish alignment, negative MACD, and beta around 1.31. The position should be immediately reduced by 20–25% while retaining a smaller core; the residual should be exited or materially reduced on a volume-confirmed close below the $228 stop loss.
| Position | Action |
|---|---|
| Current position | Trim 20–25% immediately |
| Residual core | Retain smaller core rather than full liquidation |
| Position remains open | Do not add while TXN stays below 10-day and 50-day averages with negative MACD |
TXN at $258.92 represents a best-in-class analog franchise with accelerating fundamentals, inflecting FCF, and AI infrastructure tailwinds trading at a reasonable forward P/E of 24.3x with 24% upside to analyst price targets.
| Indicator | Value | Signal |
|---|---|---|
| RSI(14) | 42.12 | neutral |
| MACD Line | -6.63 | bearish |
| MACD Signal | -6.61 | bearish |
| MACD Histogram | -0.02 | bearish |
| ATR(14) | 8.56 | neutral |
| VWMA(30) | 260.84 | bearish |
| 10 EMA | 259.45 | bearish |
| 50 SMA | 278.82 | bearish |
| 200 SMA | 238.00 | bullish |
| Bollinger Middle (20 SMA) | 265.48 | bearish |
| Bollinger Upper Band | 284.02 |
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: TXN stabilizes near the $238–$240 support area
Then: Consider reassessing the residual core position
Valuation is reasonable, not premium, on forward metrics
↩ rebuts: “Bear's 'premium valuation' argument”
EV: +16-24%
TXN is a falling knife in a hostile macro environment, priced for a cyclical recovery that is already in the rearview mirror, with a 24x forward P/E sitting 20% above historical norms, CapEx-driven FCF that will mean-revert, and technicals confirming the path of least resistance is lower, not higher.
· concedes: The cyclical recovery is real — revenue did improve from $4.42B to $5.46B; The 294% FCF increase is a real number in the quarter, even if it stems from CapEx normalization; One green day (+1.82% outperformance) did occur on a down tape; RSI is not deeply oversold at 42, which could theoretically limit further downside momentum; The 200 SMA at $238 still represents 8.8% below current price, meaning support hasn't been tested yet
→ vs conservative: Anchoring on TTM P/E of 39 ignores that 24x forward multiple is already 20 to 30 percent premium to historical 18-20x range—mean reversion math targets $213 not $258
→ vs neutral: Waiting for confirmation above 265 or below 246 means missing 2.5 to 5 percent of the move; confirmation-based exits are hindsight dressed as discipline
| neutral |
| Bollinger Lower Band | 246.94 | bearish |
Support: 238 · 246.94 · 256.45 | Resistance: 265.48 · 278.82 · 284.02
TXN trades at $258.92 (2026-09-08) in a short- and medium-term downtrend, with price below both the 10 EMA ($259.45) and 50 SMA ($278.82) but above the 200 SMA ($238.00). RSI neutral-weak at 42.12, MACD histogram compressed at -0.02 with no bullish cross yet. Key resistance at $265.48 (20 SMA) and $278.82 (50 SMA); critical support at $238.00 (200 SMA). HOLD rating maintained; await either a daily close above $265.50 for a long entry or below $246.94 to confirm next leg down.
Market Cap
$236.46 billion
Stock Price (52w High)
$334.03
Stock Price (52w Low)
$152.73
50-Day Moving Average
$280.03
200-Day Moving Average
$239.38
Beta
1.314
P/E Ratio (TTM)
39.29
Forward P/E
24.32
PEG Ratio
0.92
Price to Book
13.13
Dividend Yield
2.20%
EPS (TTM)
$6.59
Forward EPS
$10.64
Gross Profit (TTM)
$11.35 billion
Revenue (TTM)
$19.45 billion
Gross Margin
~58.3%
EBITDA
$9.52 billion
Operating Margin
42.58%
Net Profit Margin
31.11%
Return on Equity (ROE)
35.18%
Return on Assets (ROA)
13.06%
Q2 2026 Revenue
$5.46 billion
Q2 2026 Gross Profit
$3.35 billion
Q2 2026 Operating Income
$2.33 billion
Q2 2026 Net Income
$1.98 billion
Q2 2026 Diluted EPS
$2.14
Q2 2026 Operating Cash Flow
$2.70 billion
Q2 2026 Free Cash Flow
$2.19 billion
Q2 2026 CapEx
$0.51 billion
Q1 2026 Revenue
$4.83 billion
Q1 2026 Net Income
$1.55 billion
Q1 2026 Diluted EPS
$1.68
Q4 2025 Revenue
$4.42 billion
Q4 2025 Net Income
$1.16 billion
Q4 2025 Diluted EPS
$1.27
Q3 2025 Revenue
$4.74 billion
Q3 2025 Net Income
$1.36 billion
Q3 2025 Diluted EPS
$1.48
Q2 2025 Revenue
$4.45 billion
Q2 2025 Net Income
$1.30 billion
Q2 2025 Diluted EPS
$1.41
Total Assets
$35.88 billion
Cash and ST Investments
$7.00 billion
Total Current Assets
$15.76 billion
Total Current Liabilities
$3.24 billion
Working Capital
$12.51 billion
Long-Term Debt
$12.90 billion
Total Debt
$14.05 billion
Net Debt
$10.39 billion
Stockholders' Equity
$18.01 billion
Goodwill and Intangibles
$4.64 billion
Net PP&E
$11.91 billion
Current Ratio
4.86x
Debt-to-Equity
78.0%
Annual Dividends
~$5.16 billion
Treasury Stock
$41.94 billion
Revenue Trend (Q4'25 to Q2'26)
$4.42B to $5.46B (+23.5%)
EPS Trend (Q4'25 to Q2'26)
$1.27 to $2.14 (+68.5%)
CapEx Trend (Q2'25 to Q2'26)
$1.31B to $0.51B (-60.7%)
FCF Trend (Q2'25 to Q2'26)
$0.56B to $2.19B (+294%)
Implied EPS Growth (TTM to Forward)
~61.5%
Strengths
Concerns
Texas Instruments (TXN) represents a high-quality cyclical recovery play with best-in-class fundamentals, including 42.58% operating margin, 35.18% ROE, and a fortress balance sheet featuring a 4.86x current ratio and $7.00B in cash; the company has demonstrated clear recovery from its Q4 2025 cyclical trough with Q2 2026 revenue reaching $5.46B and EPS of $2.14, while CapEx normalization from $1.31B to $0.51B has driven FCF expansion to $2.19B. With the stock trading above both its 50-day ($280.03) and 200-day ($239.38) moving averages and forward P/E of 24.32x against expected EPS growth to $10.64, the valuation appears reasonable but not cheap given the TTM P/E of 39.29x and high beta of 1.314. Q3 2026 earnings expected in late October 2026 will be the critical catalyst to validate whether the recovery is sustainable or if the current rally has outrun fundamentals.
Macro: Macro environment is characterized by cross-currents hitting risk assets: Middle East/Iran tensions are driving a crude oil rally with markets beginning to price in the conflict; benchmark Treasury yields have jumped and defensive pressure is appearing on rate-sensitive mega-caps; the Federal Reserve is aggressively repricing away from easing with no-cut odds at 93% (+3.9 pp week-over-week) on Polymarket; US recession probability remains low at 8%, supporting a soft-landing base case; an imminent CPI print is the dominant near-term catalyst; FRED macro data was unavailable this session due to API key not being configured.