Texas Instruments Surges 8.1% on Earnings Hype and Undervaluation Narrative – Is This a Buy?

Summary
• Texas Instruments (TXN) surges 8.09% to $191.51, hitting a 4-week high amid anticipation for Q4 2025 earnings on Jan 27.
• Analysts split on valuation, with a popular narrative pegging fair value at $188.92 versus current price.
• Options frenzy: 1238 contracts traded for the $195 call option, signaling bullish bets on post-earnings momentum.

The stock’s sharp rebound from $180.09 to $192.92 reflects a mix of earnings optimism and a valuation gap highlighted by conflicting narratives. With the semiconductor sector rallying on AI-driven demand, TXN’s analog chip dominance and upcoming results position it as a focal point for traders navigating a volatile market.

Earnings Hype and Undervaluation Narrative Fuel TXN’s Surge
Texas Instruments’ 8.09% intraday rally stems from a confluence of factors: anticipation for its Q4 2025 earnings call on Jan 27 and a valuation debate between a $188.92 fair value narrative and a $136.34 DCF model. The stock’s 52-week high of $221.69 remains distant, but the 7.3% gain from $177.17 to $191.51 aligns with a short-term undervaluation thesis. Analysts’ mixed sentiment—average rating of 'Hold' with a $191.49 price target—further fuels speculation. The surge coincides with broader semiconductor sector strength, driven by AI infrastructure demand and TSMC’s China licensing news.

Semiconductor Sector Rally: NVDA Leads as TXN Gains Momentum
The semiconductor sector, led by NVIDIA’s 0.03% intraday gain, has surged 34.22% year-to-date, outpacing the S&P 500’s 16.87%. Texas Instruments’ 8.09% move mirrors the sector’s bullish momentum, though it lags behind NVDA’s 56.53% market weight. The sector’s strength is underpinned by AI infrastructure demand, with TSMC’s China licensing approval and ByteDance’s $14B Nvidia chip order reinforcing long-term growth themes. TXN’s analog chip dominance positions it to benefit from this trend, though its 34.19 P/E ratio suggests a more conservative valuation compared to peers like AMD’s 35.03 P/E.

Options Playbook: High-Leverage Calls and Gamma-Driven Bets
• 200-day average: 181.42 (below current price); RSI: 44.10 (neutral); MACD: 1.37 (bullish divergence).
• Bollinger Bands: Price at $191.51 exceeds upper band of $182.81, signaling overbought conditions.
• Key support/resistance: 200D range of $178.89–$180.40; 30D range of $176.75–$177.33.

Top Options Picks:
• TXN20260116C195 (Call, $195 strike, Jan 16 expiry):
- IV: 33.95% (moderate)
- Leverage: 64.85%
- Delta: 0.3856 (moderate sensitivity)
- Theta: -0.2592 (high time decay)
- Gamma: 0.0339 (strong price sensitivity)
- Turnover: 308,340 (high liquidity)
- Payoff at 5% upside: $191.51 → $196.07 → max(0, $196.07 - $195) = $1.07 per share. This contract offers aggressive leverage for a 5% price move, with high gamma amplifying gains if the stock breaks above $195.

• TXN20260116C190 (Call, $190 strike, Jan 16 expiry):
- IV: 34.40% (moderate)
- Leverage: 36.44%
- Delta: 0.5589 (high sensitivity)
- Theta: -0.2927 (high time decay)
- Gamma: 0.0345 (strong price sensitivity)
- Turnover: 135,958 (high liquidity)
- Payoff at 5% upside: $191.51 → $196.07 → max(0, $196.07 - $190) = $6.07 per share. This contract balances leverage and delta for a mid-term bullish play, ideal if TXN consolidates above $190 before expiry.

Action: Aggressive bulls may consider TXN20260116C195 into a breakout above $195, while balanced traders could use TXN20260116C190 for a safer, higher-probability trade.

Backtest Texas Instruments Stock Performance
The backtest of Texas Instruments (TXN) after an 8% intraday increase from 2022 to the present shows mixed results. While the stock experienced a maximum return of 0.74% over 30 days, the overall performance was lackluster, with a 3-day win rate of 48.33%, a 10-day win rate of 48.12%, and a 30-day win rate of 48.12%. The maximum return day was recorded on January 6, 2026, indicating that the 8% surge may not have been sustained over the longer term.

TXN’s Earnings Call and Sector Momentum: A High-Stakes Play for Q1
Texas Instruments’ 8.09% surge reflects a mix of earnings optimism and a valuation gap, but sustainability hinges on Q4 2025 results and sector dynamics. Key levels to watch: $195 (psychological hurdle) and $190 (critical support). The semiconductor sector’s 34.22% YTD gain, led by NVIDIA’s 0.03% intraday move, underscores AI-driven demand. Investors should prioritize the Jan 27 earnings call for guidance on 2025 EPS and capital allocation. For now, high-gamma calls like TXN20260116C195 offer aggressive leverage, but caution is warranted if the stock fails to hold above $190. Watch for $195 breakout or earnings-driven volatility.