TXN - Texas Instruments Q2 Preview: Fade The Rally - Too Expensive Here

2024-07-01 10:46:49 ET

Summary

• TXN and ADI have hinted at the recovery of the analog chips market, with the next quarterly earnings call likely to bring about QoQ top-line improvements.
• However, this also means that TXN has pulled forward most of its upside potential through 2026, with it appearing to be expensive at current levels.
• While the geopolitically dependable capacity is commendable, the intensified capex has also triggered its deteriorating balance sheet and moderating shareholder returns.
• With the wider market and many other semiconductor stocks also pulling back from recent heights, we believe that there may be more uncertainty in the near term.
• With TXN set to report their FQ2'24 earnings call on July 23, we highlight a few key metrics for readers to look out for.

TXN's Investment Thesis Remains Expensive Here - No Margin Of Safety

We previously covered Texas Instruments ( TXN ) in January 2023, discussing its robust profit margins and expanded R&D returns due to the mature nodes' longer product life cycle of up to 15 years.

Combined with the potential benefits from the Chips Act, tempering some of the $30B Capex headwinds, we had believed that it offered a compelling diversification thesis for those looking to buy semiconductors stocks....

For further details see: