Texas Instruments (TXN) Plunges 0.67% to 2025 Low on Bank of America Downgrade, AI Exposure Concerns

Texas Instruments (TXN) fell 0.67% on Monday, hitting its lowest level since May 2025. The stock dropped as much as 2.09% during intraday trading, reflecting renewed investor concerns over strategic positioning and market dynamics.

The recent downgrade from Bank of America Securities has intensified market anxiety. The firm highlighted demand pressures, margin constraints, and limited AI exposure as key concerns, cutting the price target to $190 from $208 and reclassifying the stock to “Underperform.” This underscores broader macroeconomic uncertainties and sector-specific challenges affecting TXN’s outlook.

TXN’s limited involvement in the AI investment cycle contrasts with peers like Analog Devices, which are leveraging surging AI infrastructure demand. This has raised questions about TXN’s ability to sustain long-term revenue growth in the evolving semiconductor landscape. Analysts note that AI-driven demand remains a critical growth lever for competitors, amplifying TXN’s current vulnerability.

Valuation assessments remain divided. Some models suggest undervaluation based on industrial automation and automotive growth, while others indicate overvaluation. The P/E ratio of 31.7x, below the industry average, reflects mixed investor sentiment. Elevated inventory levels and constrained capital expenditures further complicate the valuation picture, signaling potential operational inefficiencies.

Operational inefficiencies, including elevated inventory and constrained capex, pose risks. Projected capex declines may limit production scaling and CHIPS Act leverage. Conservative management guidance has also contributed to cautious expectations, with analysts adjusting 2026 and 2027 EPS estimates downward to $6.05 and $6.91, respectively.

Despite challenges, TXN holds a strong position in industrial and automotive markets with critical analog and embedded chips. However, competition and potential margin pressures highlight the need for strategic adjustments. Long-term growth depends on adapting to trends like industrial automation and automotive electrification, though geopolitical and supply chain risks remain significant headwinds.