Texas Instruments Plunges 13.5%: Will Tariff Jitters and Earnings Woes Define the Next Move?

Summary
• Texas Instruments (TXN) plunges 13.5% in intraday trading, breaking below $186 for the first time since early 2023.
• CEO Haviv Ilan warns of 'shallow' automotive sector recovery and tariff-driven demand distortions.
• Q3 guidance misses expectations, with EPS midpoint at $1.48 vs. $1.51, and revenue seesawing near $4.63B.

The stock’s freefall follows a rare 12% single-session drop, driven by a confluence of weak guidance, tariff uncertainty, and sector-wide headwinds. With turnover surging to 23.5M shares and a 2.59% turnover rate, TXN’s volatility has spiked, testing key support levels as the semiconductor sector reels.

Earnings Disappointment and Tariff Fears Trigger Selloff
Texas Instruments’ 13.5% intraday drop stems from a dual blow: weaker-than-expected Q3 guidance and CEO Haviv Ilan’s blunt assessment of tariff-driven demand distortions. While Q2 results beat Wall Street estimates, the forward-looking narrative collapsed as management highlighted a 'shallow' automotive recovery and customer hesitation over U.S. tariff policies. The midpoint of Q3 EPS guidance ($1.48) fell short of the $1.51 consensus, while revenue guidance of $4.63B, though slightly ahead of expectations, was framed as cautious. Ilan’s comments about pre-tariff inventory pulls in Q2 further muddied demand visibility, triggering a sell-off as investors recalibrated risk premiums.

Semiconductor Sector in Sync with TXN’s Slide
The semiconductor sector mirrored TXN’s decline, with peers like Analog Devices (ADI) and NXP Semiconductors (NXPI) also trading lower. As a sector bellwether, TXN’s selloff amplified macro fears, particularly after ASML’s recent growth warning. Intel (INTC) bucked the trend, rising 0.97%, but its outperformance highlights sector fragmentation. The broader selloff reflects growing anxiety over trade tensions and capital spending slowdowns, with TSMC’s exit from GaN production and China’s foundry ambitions adding to the uncertainty.

Options and ETFs to Hedge the Volatility: A Tactical Playbook
• 200-day average: 190.38 (below current price); RSI: 59.47 (neutral); MACD: 5.32 (bearish divergence with signal line at 6.54).
• Bollinger Bands: Upper at 224.05, Middle at 213.97, Lower at 203.88 (price now sub-200-day MA at 184.87).

With TXN testing key support levels and volatility spiking, the most compelling options are deep-in-the-money puts. The TXN20250801P185 and TXN20250801P180 contracts stand out:

• TXN20250801P185:
- IV: 36.62% (moderate)
- Leverage Ratio: 47.72% (high)
- Delta: -0.4446 (moderate sensitivity)
- Theta: -0.050988 (moderate time decay)
- Gamma: 0.035003 (high sensitivity to price moves)
- Turnover: 310,181 (liquid)
- Payoff (5% downside): $7.25 per contract (max(0, 176.61 - 185)).
- This put offers a high leverage ratio and strong gamma, ideal for a bearish bias as the stock approaches critical support.

• TXN20250801P180:
- IV: 34.64% (reasonable)
- Leverage Ratio: 103.98% (extreme)
- Delta: -0.2671 (moderate sensitivity)
- Theta: -0.0746 (high time decay)
- Gamma: 0.0308 (high sensitivity)
- Turnover: 240,317 (liquid)
- Payoff (5% downside): $15.39 per contract (max(0, 176.61 - 180)).
- The 180 put’s extreme leverage ratio and high gamma make it a high-risk/high-reward play, contingent on a breakdown below $180.

Action Plan: Aggressive bears should target TXN20250801P185 into a break below $185, while cautious investors may scale into TXN20250801P180 as support tests. A 5% downside scenario yields ~$7–$15 per contract, aligning with the stock’s short-term bearish bias. Monitor the 200-day MA at $190.38 as a critical reentry trigger.

Backtest Texas Instruments Stock Performance
The backtest of Texas Instruments (TXN) after a -14% intraday plunge shows favorable performance metrics. The 3-Day win rate is 55.56%, the 10-Day win rate is 54.12%, and the 30-Day win rate is 59.14%. This indicates that the stock tends to rebound in the short term following a significant drop. The maximum return during the backtest period was 3.64%, which occurred on day 59, suggesting that TXN can deliver positive returns even after a substantial intraday decline.

The Road to Recovery: Key Levels to Watch for a Rebound
Texas Instruments’ 13.5% plunge has created a near-term trading opportunity, but sustainability hinges on macro clarity. The 200-day MA at $190.38 and 52-week high at $221.69 will be critical reentry levels. If the stock fails to hold above $185, the 180–175 support corridor could see aggressive short-term selling. Meanwhile, Intel’s 0.97% rise underscores sector divergence, but TXN’s technicals and options activity suggest continued pressure. Act now: Buy TXN20250801P185 for a defined-risk bearish play, and watch for a breakdown below $185 to confirm the next leg lower.