Stock Analysis | Texas Instruments Outlook - A Cautionary Signal Amid Mixed Analyst Expectations

Market Snapshot

Headline takeaway: Texas Instruments (TXN) is showing a 4.19% price rise, but technical indicators and bearish signals suggest caution.

News Highlights

Recent developments include:

• McKinsey weighs in on tariffs and chip supply chains: New research from McKinsey & Co explores how US tariffs could affect the semiconductor industry, adding uncertainty to supply chains.
• Japan proposes cooperation on rare earths and semiconductors: Japan's government is working on proposals with the US to boost rare earths and semiconductor cooperation, potentially helping counter China's influence in the sector.
• Intel and AMD alumni launch AI chip ventures in India: With incentives and growing demand, AI chip startups are emerging from former executives of major semiconductor firms, highlighting competitive pressures in the sector.

Analyst Views & Fundamentals

Analysts are divided in their views, with a simple average rating of 4.00 and a weighted performance rating of 2.79. The dispersion of ratings—ranging from "Strong Buy" to "Neutral"—suggests a lack of consensus among analysts. However, the 4.19% recent price rise contrasts with a relatively neutral market expectation (with 7 "Neutral" ratings out of 18).

Key fundamental values include:

• Net cash flow from operating activities per share (YoY growth rate): 5.14% – scored 1 on our internal diagnostic scale (0-10).
• EV/EBIT: 136.78 – scored 4 on our internal diagnostic scale.
• Interest coverage ratio (EBIT / Interest expense): 11.55% – scored 3 on our internal diagnostic scale.
• Net profit attributable to parent company shareholders (YoY growth rate): 10.81% – scored 2 on our internal diagnostic scale.
• Cash-MV: -0.34 – scored 2 on our internal diagnostic scale.

While some fundamentals remain stable or positive, the overall alignment with the recent price trend is questionable, as the market is not showing strong confidence in earnings growth or margin sustainability.

Money-Flow Trends

Texas Instruments is attracting attention from both large and small investors. The overall inflow ratio is 52.20%, showing a positive trend for all investor categories.

• Large and extra-large funds are showing the highest inflow ratios at 51.30% and 52.99%, respectively, indicating institutional confidence.
• Small investors are also contributing with a 50.33% inflow ratio, suggesting retail participation in the rally.

Despite this, the mixed analyst ratings and bearish technical signals suggest the market may be overreacting to short-term momentum.

Key Technical Signals

Our proprietary model's technical score for Texas Instruments is 1.91, indicating a weak trend. Recent bearish indicators are dominant:

• WR Overbought has an internal diagnostic score of 2.82, showing some strength but still leaning neutral.
• RSI Overbought scores 1.00, clearly bearish.
• Bearish Engulfing scores 1.92, reinforcing a bearish bias.

Chart patterns over the last 5 days show a continued presence of overbought indicators. From August 22 to August 28, WR Overbought and RSI Overbought persisted, and a Bearish Engulfing pattern emerged on August 28. These patterns suggest a potential reversal or correction in the near term.

Key insight: Technical indicators show a weak state with a risk of decline, as three bearish signals dominate over no bullish ones.

Conclusion

Texas Instruments' recent price rise of 4.19% has drawn attention, but our internal models and the technical indicators suggest caution. The technical score of 1.91 and three bearish signals indicate a vulnerable setup. Analyst ratings are mixed, with a weighted rating of 2.79 that does not align well with the current price momentum.

Actionable takeaway: Given the bearish technical setup and mixed analyst views, it may be prudent to wait for a clearer trend or consider taking profits in the near term, rather than chasing the recent rally.