Texas Instruments Should Be Well-Placed To Navigate 'Interesting Times' For The Semiconductor Sector

As the Street has come around to the idea of weaker demand in 2023, semiconductor stocks have had a rougher go of it lately, and Texas Instruments (NASDAQ:TXN) ("TI") is no exception. While TI has held up better than the average chip company (fair, given its quality), falling about 10% since my last update versus the 25% drop in the SOX index, the shares have moved into that $150’s range that I said I would find more interesting.

I do see some risk of a greater slowdown in auto and industrial demand in 2023, but I believe the longer-term outlook for TI is unchanged – while the last couple of years have been unusual in terms of demand and supply trends, I believe the increased electrification seen across numerous end-markets is not some temporary aberration. With that, I expect healthy mid-single-digit long-term revenue growth from TI as well as strong margins. The shares now look attractively-priced, though readers should be aware of the overall risk that a higher, sharper peak in this last semiconductor cycle could well be followed by an unusually sharper trough before a stronger recovery in 2024.

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Texas Instruments Should Be Well-Placed To Navigate 'Interesting Times' For The Semiconductor Sector