Texas Instruments Plunges 12%—Tariff Jitters and Earnings Shockwave Spark Sector Turbulence: What's Next for the Chip Giant?

Summary
• Texas Instruments (TXN) slumps 12% in intraday trading, sinking to $187.52 after opening at $194.90
• CEO Haviv Ilan warns of tariff-driven demand distortions and 'shallow' automotive sector recovery
• Q2 revenue surges 16% YoY to $4.45B, yet EPS guidance falls short of $1.50 estimate

The semiconductor titan’s sharp reversal has investors scrambling to decipher the confluence of tariff anxieties, earnings underperformance, and macroeconomic headwinds. With the stock trading 12% below its morning open and below key technical levels, the market is now pivoting to defensive plays while dissecting CEO Ilan’s remarks on inventory distortions and geopolitical uncertainty.

Tariff-Driven Demand Distortions and Guidance Shortfall Trigger Sell-Off
Texas Instruments’ 12% intraday collapse stems from a dual shockwave: CEO Haviv Ilan’s explicit warning that Q2 strength partially resulted from customers pulling forward inventory ahead of tariffs, coupled with a third-quarter earnings forecast that fell below analyst expectations. The midpoint of $1.48 EPS versus the $1.50 LSEG estimate, alongside tariff-related demand uncertainty, triggered a flight to safety. Despite a 16% YoY revenue increase to $4.45B and a 15% net income rise to $1.3B, the market’s focus on near-term execution risks and macroeconomic fragility has overwhelmed positive fundamentals.

Semiconductor Sector Wavers as ADI Trails Behind TXN’s Freefall
The broader semiconductor sector mirrored TXN’s bearish tone, with Analog Devices (ADI) declining 1.43% despite its lower volatility. While TXN’s 12% drop outpaced sector moves, ADI’s muted decline suggests macroeconomic concerns—particularly tariff and geopolitical uncertainty—remain sector-wide headwinds. The divergence highlights TXN’s unique exposure to inventory management and automotive sector dynamics, where Ilan’s 'shallow recovery' remarks have amplified investor caution.

Bearish Positioning and Volatility Playbook: Options and Technicals in Focus
• 200-day MA: 190.38 (below current price)
• 30D MA: 209.00 (critical resistance)
• RSI: 59.47 (neutral but bearish bias)
• MACD Histogram: -1.22 (bearish divergence)
• Bollinger Bands: Current price at 203.88 (lower band)

The technicals paint a bearish near-term picture, with support at 190.38 and resistance at 209.00. A breakdown below the 200-day MA would likely accelerate selling. The options market reinforces this, with put options at strikes $180–$187.5 showing high leverage and liquidity. Two standout options for bearish exposure:

• TXN20250801P180 (Put):
- Strike: $180, Expiry: 2025-08-01
- IV: 35.17% (moderate volatility)
- LVR: 180.71% (high leverage)
- Delta: -0.172 (moderate sensitivity)
- Theta: -0.075 (acceptable time decay)
- Turnover: 192,011 (high liquidity)
- Gamma: 0.023 (responsive to price swings)
- Payoff at 5% downside (180.34): $9.66 per contract
- This put offers asymmetric reward for a continued decline, with high leverage and liquidity ensuring execution ease.

• TXN20250801P187.5 (Put):
- Strike: $187.5, Expiry: 2025-08-01
- IV: 34.24% (balanced volatility)
- LVR: 59.48% (moderate leverage)
- Delta: -0.402 (strong directional sensitivity)
- Theta: -0.051 (lower time decay)
- Turnover: 93,147 (solid liquidity)
- Gamma: 0.036 (high sensitivity to price moves)
- Payoff at 5% downside (180.34): $7.16 per contract
- This option balances directional exposure with capital efficiency, ideal for a mid-term bearish trade.

If $190.38 breaks, TXN20250801P180 offers short-side potential. For a more cautious approach, TXN20250801P187.5 provides a balanced bearish play.

Backtest Texas Instruments Stock Performance
The backtest of Texas Instruments (TXN) after a -12% intraday plunge shows favorable performance metrics. The 3-Day win rate is 55.67%, the 10-Day win rate is 54.43%, and the 30-Day win rate is 59.40%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 3.68%, which occurred on day 59, suggesting that TXN can recover from significant intraday declines.

Urgent Action Required: TXN at Critical Crossroads as Tariff Uncertainty Looms
Texas Instruments faces a pivotal juncture as its 12% intraday plunge exposes deepening macroeconomic and inventory-related risks. With support at 190.38 and resistance at 209.00, the next 48 hours will test whether this correction is a buying opportunity or a deeper bearish catalyst. Investors should monitor the 200-day MA and 30D MA for directional clues while tracking ADI’s 1.43% decline as a sector barometer. For aggressive bearish positioning, the TXN20250801P180 put offers high leverage and liquidity. Watch for a breakdown below $190 or a reversal above $209—either could redefine the stock’s trajectory.