Is Texas Instruments Stock Poised for a Sustained Recovery?

A surprising rally in Texas Instruments shares has captured market attention, fueled by optimistic commentary from its chief executive. The semiconductor stalwart appears to have reached a long-awaited inflection point, though questions remain about the durability of this rebound beyond a short-term surge.

The catalyst for the recent upward move was commentary from CEO Haviv Ilan at a UBS conference. Ilan declared that a recovery is now underway across "all markets," offering relief to investors concerned about a prolonged downturn in the analog chip sector. He highlighted two specific areas of strength: revenue from the data center business is hitting new record highs, and demand from the automotive sector is returning to levels seen in 2022 and 2023. This shift indicates the inventory correction that plagued the industry is largely in the past.

While the CEO characterized the pace of recovery as "moderate" and "slow" by historical standards, the mere confirmation that the cycle's low point has been traversed was enough to generate significant buying interest.

Market Experts Maintain a Cautious Stance

Analysts have welcomed the clearer outlook but continue to advise caution. Researchers at Zacks Investment Research acknowledge that Texas Instruments is benefiting from robust data center demand, which is helping to offset persistent softness in its industrial segment. However, they and other strategists warn that ongoing trade and tariff tensions between the U.S. and China present continuing risks.

Should investors sell immediately? Or is it worth buying Texas Instruments?

The stock's performance context adds a layer of skepticism. Despite its recent advance, TXN shares have significantly underperformed the broader semiconductor sector over the past year. While the sector gained nearly 25%, Texas Instruments equity declined by approximately 6.8%. This discrepancy suggests that full investor confidence has yet to be restored.

Evaluating the Momentum's Staying Power

The critical question for investors is whether this positive momentum can persist in the face of macroeconomic headwinds. The industrial market's recovery remains sluggish, but the "new record highs" in data center revenue provide a tangible growth narrative. The market's focus is now shifting beyond third-quarter results toward the anticipated recovery trajectory for 2025.

The company has successfully shifted its story from one centered on an "inventory correction" to a narrative of a "broad-based recovery." Management's message is unequivocal: the direction is now undeniably positive, even if the ascent may be gradual.