Texas Instruments (TXN) experienced a sharp decline on Friday, closing at $305.68, down 3.25%, as the stock pared earlier gains that had pushed it to a new 52-week high earlier in the week. The pullback capped a volatile, holiday-shortened trading period for the analog chipmaker.
The stock reached a 52-week high of $331.51 on Wednesday before sliding nearly 8% over the subsequent sessions. Trading volume surged to 16.79 million shares, more than double the average earlier in the week, indicating heightened investor activity. In contrast, the broader market showed modest gains, with the S&P 500 rising 0.22% and the Nasdaq adding 0.20%.
Texas Instruments is increasingly viewed as a key beneficiary of rising demand for power management chips used in AI data centers, shifting its perception from a purely cyclical industrial play. Analysts are focusing on the company's potential in high-voltage data-center architectures, with Bank of America raising its price target to $370 from $320. The firm also highlighted Analog Devices and ON Semiconductor as top picks in the analog chip space for AI power needs.
Bernstein senior semiconductor analyst Stacy Rasgon noted that Texas Instruments' long-term capacity expansion is nearing completion, bringing cash generation back into focus. Rasgon, speaking at a Bernstein conference, described the company as "less boring lately," reflecting growing investor interest. Seaport Research Partners upgraded the stock to "Buy" from "Neutral," setting a $400 price target, calling TI the "most diversified single-name way" to play the AI data-center power shift.
The company's recent financial results have fueled optimism. Texas Instruments reported first-quarter revenue of $4.83 billion, net income of $1.55 billion, and earnings per share of $1.68. CEO Haviv Ilan cited growth in industrial and data-center markets. The company guided second-quarter revenue between $5.00 billion and $5.40 billion, signaling continued momentum.
Despite the late-week sell-off, the broader chip sector remained stable. The iShares Semiconductor ETF (SOXX) closed at $569.08, nearly flat on the day, and remained above its May 22 level of $537.33. Texas Instruments' decline was more pronounced than the sector, as profit-taking set in after a sharp run-up.
However, risks remain. MarketScreener data shows the average analyst price target at $290.33, below Friday's close, despite most analysts rating the stock as "outperform." Any slowdown in industrial orders, a drop in auto demand, or delays in AI power-chip revenue could pressure the stock's premium valuation.
Looking ahead, key macroeconomic data will test the cyclical recovery thesis. The ISM manufacturing index on Monday and services data on Wednesday will provide clues on economic momentum, while Friday's U.S. jobs report and Broadcom earnings will offer additional insights into demand trends and the chip sector's outlook.
