Texas Instruments Soared 2.6%—Is This the Dawn of a New Bull Cycle?

Summary
• Texas Instruments (TXN) surged 2.6% to $189.83, breaking through its 52-week low resistance.
• Wolfe Research upgraded TXN to Outperform with a $230 price target, citing a $9.5B free cash flow recovery by 2027.
• RSI (18.66) and MACD (-1.38) signal oversold conditions and bearish momentum divergence.
• Options volatility spiked: 20 contracts traded above $190 strike with 20%+ implied volatility.
After years of underperformance, Texas Instruments is surging on a confluence of capital cycle optimism, sector rotation, and speculative options flows. With the stock trading near its 200D SMA ($190.13), the question is whether this breakout will ignite a multi-month rally or fade into a consolidation trap.

Capital Cycle Turnaround Fuels Bullish Re-rating
The 2.6% rally stems from Wolfe Research’s strategic thesis that Texas Instruments is exiting a multi-year capital expenditure overhang. The firm projects $9.5 billion in free cash flow by 2027, a 4.75x increase from 2024 levels, as the company’s $5 billion annual CapEx (2023-2025) gives way to $2-5 billion in 2026. This structural shift, combined with analog semiconductor demand recovery and $588 million in ITC tax credits, has triggered a re-rating. The stock’s 18.66 RSI (oversold) and 34.96 P/E (vs. 22.7 S&P 500) further support the thesis that undervalued cash flow potential is now pricing in.

Semiconductor Sector Rally Accelerates as TXN Closes Gap
The semiconductor sector is outperforming broader markets, with AMD (3.77% gain) leading the charge. Texas Instruments’ 2.6% move has reduced its 60% underperformance against the Philadelphia Semiconductor Index (SOX) since 2022. While analog chips lag discrete (e.g., GPUs), the sector’s 13.2% year-to-date gain reflects renewed confidence in AI-driven demand. TXN’s 34.96 P/E now trades at a 13% discount to SOX’s 40.8 P/E, creating a valuation arbitrage as capex-driven margin recovery gains traction.

Options Playbook: Capitalizing on 2025-08-01 Expiry Volatility
• RSI: 18.66 (oversold)
• MACD: -1.38 (bearish divergence)
• 200D SMA: $190.13 (price at 189.83)
• Bollinger Bands: Lower bound at 187.96 (current price within 1%)
• Turnover Rate: 0.57% (normal)
Key levels: Support at 187.75, resistance at 190.54. A break above 190.54 would confirm a bullish reversal from the 52W low. Short-term momentum favors long calls, with the 2025-08-01 expiry offering high leverage and liquidity.

Top Options:
• TXN20250801C190
• Strike: $190 | Expiry: 2025-08-01 | IV: 20.48% | Leverage: 115.61% | Delta: 0.47 | Theta: -0.44 | Gamma: 0.0875 | Turnover: 386,000
• Why: High leverage ratio (115.61%) and gamma (0.0875) for volatility amplification. A 5% upside (to $199.32) yields $9.32 profit ($199.32 - $190).
• TXN20250801C192.5
• Strike: $192.5 | Expiry: 2025-08-01 | IV: 21.40% | Leverage: 234.07% | Delta: 0.279 | Theta: -0.314 | Gamma: 0.0707 | Turnover: 151,103
• Why: Moderate delta (0.279) with aggressive leverage (234.07%) for capital efficiency. A 5% move to $199.32 generates $6.82 profit ($199.32 - $192.5).
Action: Aggressive bulls should buy 190C and 192.5C strangle for 5% upside exposure. Watch 190.13 (200D SMA) as a critical support level.

Backtest Texas Instruments Stock Performance
The backtest of Texas Instruments (TXN) after a 3% intraday surge shows mixed results. While the stock experienced a positive surge, the short-term performance was lackluster, with the 3-day win rate at 50.47% and the 10-day win rate at 52.37%. The 30-day win rate improved to 55.38%, indicating that longer-term gains were more probable. However, the average returns over the backtested periods were low, with a maximum return of only 1.92% over 30 days.

Breakout or Blip? Watch 190.13 Support and AMD’s Lead
The 2.6% move reflects a structural re-rating of Texas Instruments’ free cash flow recovery and analog chip demand. With 18.66 RSI and oversold conditions, the stock is primed to test the 190.54 intraday high. A close above 190.13 (200D SMA) would validate a multi-month bull trend. Short-term momentum favors long calls, particularly 2025-08-01 190C and 192.5C. Meanwhile, AMD’s 3.77% gain signals sector strength—watch for a 200D SMA breakout to confirm a broader semicon re-rating.