Why Texas Instruments' Strategic Stagnation Justifies a Sell, Despite Cramer’s Bullish Calls

The semiconductor landscape is in flux, yet Texas Instruments (NASDAQ: TXN) remains anchored in the past—a fact that even Jim Cramer, its former advocate, can no longer ignore. While the stock still offers a modest 2.5% dividend, the company’s refusal to pivot away from cyclical auto and industrial markets has led to a stark misalignment with the industry’s secular shift toward AI-driven growth. Investors are left to ask: Is TXN’s stubborn adherence to outdated markets worth the risk? The answer, increasingly, is no.

Cramer’s Contradictions: From Bullish to Bearish

In mid-2024, Cramer championed TXN as a “rebound candidate,” citing activist investor Elliott Partners’ stake and strategic meetings as catalysts. His July 29, 2024, Mad Money segment urged investors to “restart a position,” emphasizing the stock’s potential amid a “broadening” market favoring mid-cap resilience. Yet by January 2025, Cramer’s tone had shifted. He slammed TXN for its “relic”-like focus on auto/industrial markets, which account for 70% of revenue, and its failure to diversify into less cyclical sectors like data-center chips. The company’s Q1 2025 earnings miss—guidance of $0.94–$1.16 EPS versus estimates of $1.17—triggered a 7% stock plunge, underscoring his point.

The Cost of Stagnation: TXN’s -10% Underperformance

Since Cramer’s July 2024 endorsement, TXN’s shares have dropped over 10%, even as peers pivoting to AI/data centers surged. While Texas Instruments languished, Micron Technology (MU), for example, repositioned aggressively into high-margin data-center memory chips. This strategic agility helped MU’s stock rise 25% over the same period. TXN’s lack of comparable innovation has left it in the dust, with its auto/industrial exposure now a liability as global demand slumps.

Institutional Skepticism: No Major Accumulators

Despite 3,481 institutional holders, TXN lacks meaningful support from major accumulators. While minor players like Trexquant Investment LP boosted stakes by 479.6%, Zurich Insurance Group’s 39.8% increase pales compared to the capital inflows Micron and other agile peers attract. The absence of a dominant buyer signals a lack of conviction in TXN’s ability to adapt—a stark contrast to the crowded bets on AI-driven stocks.

The Micron Mirror: Agility vs. Stagnation

Micron’s success exemplifies the rewards of strategic foresight. By shifting 20% of its R&D to AI-friendly HBM (high-bandwidth memory) chips, Micron not only insulated itself from cyclical downturns but also captured a $50B addressable market in cloud computing and autonomous vehicles. TXN, meanwhile, has no equivalent plan. Its CHIPS Act-funded $1.61B semiconductor plant—a “bull case” cited by bulls—will only deepen its reliance on declining markets unless paired with diversification.

The Bottom Line: Sell TXN Now

Even with its 2.5% dividend, TXN’s valuation hinges on a strategy that’s failing. A Federal Reserve rate cut might temporarily buoy auto sales, but it won’t fix the company’s long-term misalignment. The stock’s 20.5x P/E ratio, compared to Micron’s 12.3x, reflects investor overpayment for stagnation. Sell TXN. Redirect capital to agile peers like Micron or AI leaders like NVIDIA (NVDA), where innovation—not inertia—drives returns.

In a world demanding reinvention, Texas Instruments is proving that clinging to the past is a sure path to obsolescence.