Should You Buy, Sell or Hold TXN Stock After an 8.9% Rise in a Month?

Texas Instruments TXN stock climbed 8.9% in the past month, outperforming the Zacks Semiconductor - General industry’s growth of 1.4% in the same time frame. This outperformance raises the question: Should investors accumulate TXN shares or book profits and exit the investment?

Texas Instruments One Month Price Performance Chart

TXN Grows on the Back of Data Center and AI Demand

Texas Instruments is gaining from solid data center demand, which is boosting its prospects in the enterprise systems market. A sustained focus on expanding its product portfolio across the Analog and Embedded Processing segments helps capture market share.

Broad-based industry growth and China-rebound are also boosting TXN’s growth prospects. Per a report by the Semiconductor Industry Association, the global semiconductor market is demonstrating signs of robust growth, with an 18.8% year-over-year rise in sales in the March-end quarter of 2025, reaching $167.7 billion.

As Texas Instruments serves diverse end markets like personal electronics, industrial, communications and automotive, it gains from new development in all of these markets. The diverse client base also provides stability against seasonality and cyclical downturns.

To keep its dominance across industries and capitalize on the emergence of 5G technology, AI and high-performance computing space, TXN is prioritizing chip manufacturing under its internal manufacturing facilities instead of relying on outside foundries. The company aims to manufacture more than 95% of its wafers internally by 2030.

Texas Instruments has been awarded up to $1.6 billion in CHIPS Act funding, with total benefits of $7.5-$9.5 billion over its lifetime. This will aid TXN in leveraging economies of scale and vertical integration, reducing costs and increasing margins. The Zacks Consensus Estimate for TXN’s 2025 and 2026 earnings indicates growth rate of 7.7% and 14.8%, respectively.

TXN Faces Macroeconomic and Competitive Headwinds

Texas Instruments is highly exposed to the US-China trade policies. China accounted for approximately 20% of its 2024 revenues. While TXN reported growth in China in the recent quarter, rising geopolitical tensions between the US and China can jeopardize its operations anytime and potential trade restrictions could impact its future performance.

Slow recovery across the automotive end market might hurt Texas Instruments’ overall growth prospects. Its automotive segment is recovering slowly compared with other markets. In the second quarter of 2025, automotive revenues declined sequentially in the low-single-digit percentage range.

Texas Instruments operates in an intensely competitive industry. First, there are many competitors of all sizes, such as Broadcom AVGO, NXP Semiconductors NXPI, Analog Devices ADI and Intel. Second, the fragmented nature of the industry allows firms to find niches where they can concentrate their efforts.

Texas Instruments competes with Analog Devices in the analog and mixed signal chips space. Analog Devices is a high-performance analog chip specialist in signal processing, radio frequency across aerospace, defense, communications and instrumentation, where TXN operates.

TXN and NXP Semiconductors overlap in automotive semiconductors, providing MCUs, radar, sensors, networking and secure ID products, while Broadcom competes in networking, wireless, radio frequency and custom ASICs domains. While TXN has a broad product base, NXP Semiconductors and Broadcom are domain specialists.

Texas Instruments’ Valuation Metrics

From a valuation perspective, while TXN trades at a forward price-to-sales ratio of 10.03x, below the industry average of 15.66x, the ongoing headwinds it faces help justify this relative discount.

Texas Instruments Forward 12 Month (P/S) Valuation Chart

Conclusion: Hold TXN Stock For Now

Texas Instruments is benefiting from solid data center demand, which is boosting its prospects in the enterprise systems market. However, its overall growth might be impacted by a slow recovery in the automotive market as customers are cautiously spending amid ongoing macroeconomic uncertainties. Rising manufacturing costs and the growing tech war between the United States and China are other concerns.

TXN carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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