Query: How would you react should you held Texas Devices inventory (NASDAQ: TXN) and its worth fell by 30% or extra within the upcoming months? Though this might sound excessive, such an prevalence has occurred earlier than and will repeat itself. Texas Devices inventory has been a blended performer of late. It has declined by about 4% year-to-date in 2025 and has gained about 6% over the past 12 months. This compares to the S&P 500 which has gained about 10% over the previous 12 months. Whereas the broader semiconductor trade has picked up a bit, led by a surge in demand for synthetic intelligence chips, and a modest restoration within the private laptop market, Texas Devices has been witnessing some headwinds in its key automotive and industrial segments. Furthermore, the general market is present process a major sell-off, spurred by rising issues a couple of U.S. recession following tariffs imposed by President Donald Trump on main buying and selling companions. Demand for Texas Devices merchandise is extra levered to the broader financial system and industrial exercise and the inventory might see a pointy correction within the occasion of a downturn.
Right here’s the purpose: The important thing takeaway is that in a downturn, Texas Devices inventory would possibly incur significant losses. Knowledge from 2020 signifies that TXN inventory misplaced about 30% of its worth in only some quarters whereas additionally seeing a peak-to-trough decline of about 22% throughout the 2022 monetary disaster, faring a tad worse than the S&P 500. This raises the query: Might the inventory see a sell-off and attain as little as $125 if an analogous scenario have been to unfold? Naturally, particular person shares are usually extra risky than diversified portfolios. Subsequently, if you’re on the lookout for progress with decreased volatility, you would possibly take into account the High-Quality portfolio, which has outperformed the S&P 500 and generated returns of over 91% since its inception.
Why Is It Related Now?
Texas Devices’ monetary efficiency has been blended in latest quarters. Within the automotive market, prospects have been lowering stock constructed up after pandemic-related provide chain points. The economic section, which incorporates analog merchandise like amplifiers, energy administration units, microcontrollers and specialised processors, can also be witnessing some weak spot. The communications gear sector additionally scaled again purchases resulting from a slowdown in 5G community deployment, particularly within the U.S. Furthermore, Texas Devices’ gross margins have additionally confronted strain with barely increased manufacturing prices related to decreased manufacturing unit utilization. For 2024, gross margins stood at roughly 58%, down from about 62% a 12 months earlier.
President Donald Trump’s aggressive tariff measures -including a 20% tariff on Chinese language imports and 25% on imports from Canada and Mexico, together with tighter immigration restrictions – have raised issues that inflation would possibly return. All of this means that the U.S. financial system might encounter vital difficulties and even a recession – our analysis here on the macro picture. In actual fact, final week, throughout an interview, the President didn’t rule out the chance that new tariffs would possibly set off a recession. When bearing in mind the heightened uncertainty from the Trump administration’s insurance policies, these dangers develop into particularly essential. The continued Ukraine–Russia struggle and international commerce tensions additional obscure the financial outlook. Tariffs improve import prices, resulting in increased costs, decreased disposable revenue, and weaker shopper spending. This might influence TXN as the corporate’s product lineup is seen to be extra depending on macroeconomic elements, in comparison with different elements of the semiconductor trade. For perspective, industrial and automotive chips, that are very cyclical, account for over two-thirds of Texas Devices’ income.
How resilient is TXN inventory throughout a downturn?
TXN inventory has seen an influence that was barely worse than the benchmark S&P 500 index throughout a number of the latest downturns. Apprehensive in regards to the influence of a market crash on TXN inventory? Our dashboard How Low Can Texas Instruments Stock Go In A Market Crash? has an in depth evaluation of how the inventory carried out throughout and after earlier market crashes.
Inflation Shock (2022)
• TXN inventory fell 22.3% from a excessive of $191.01 on 29 March 2022 to $148.34 on 16 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The inventory totally recovered to its pre-Disaster peak by 14 Might 2024
• Since then, the inventory has elevated to a excessive of $220.29 on 10 November 2024 and at present trades at round $180
Covid Pandemic (2020)
• TXN inventory fell 29.8% from a excessive of $133.13 on 19 February 2020 to $93.50 on 16 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The inventory totally recovered to its pre-Disaster peak by 17 July 2020
World Monetary Disaster (2008)
• TXN inventory fell 62.4% from a excessive of $36.59 on 9 October 2007 to $13.77 on 2 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The inventory totally recovered to its pre-Disaster peak by 2 Might 2013
Premium Valuation
At its present value of about $180 per share, TXN is buying and selling at roughly 34x consensus 2025 earnings, which appears considerably costly. Furthermore, the corporate’s progress charges have been middling. Revenues contracted over 2024, and are anticipated to develop within the excessive single-digits for 2025. With recession dangers rising, issues might get difficult for TXN.
Given this potential slowdown in progress and the broader financial uncertainties, ask your self the query: do you propose to carry on to your Texas Instrument inventory now, or will you panic and promote if it begins dropping to $150, $125, and even decrease? Holding onto a declining inventory is rarely simple. Trefis collaborates with Empirical Asset Administration—a Boston space wealth supervisor—whose asset allocation methods yielded optimistic returns throughout the 2008-09 interval when the S&P misplaced greater than 40%. Empirical has integrated the Trefis HQ Portfolio into its asset allocation framework to offer purchasers with higher returns and fewer danger in comparison with the benchmark index—a much less turbulent journey, as proven in HQ Portfolio efficiency metrics.
| Returns | Mar 2025 MTD [1] |
2025 YTD [1] |
2017-25 Complete [2] |
| TXN Return | -8% | -3% | 209% |
| S&P 500 Return | -5% | -4% | 153% |
| Trefis Strengthened Worth Portfolio | -6% | -8% | 552% |
[1] Returns as of three/18/2025
[2] Cumulative whole returns for the reason that finish of 2016
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
