Should You Hold on to TXN Stock Despite Its 11% Dip in 6 Months?

Core Viewpoint - Texas Instruments (TXN) has experienced a significant decline in stock performance, dropping 10.9% over the past six months, underperforming both the Zacks Computer and Technology sector and the S&P 500 index [1][3] Group 1: Underperformance Factors - TXN's underperformance is attributed to challenges in its industrial, automotive, and enterprise systems markets, which together account for 70% of its revenues, showing modest sequential declines in Q4 2024 [3][6] - The Embedded Processing segment, contributing over 15% to total revenues in the past five years, is facing cyclicity leading to decreased sales [4][5] - Geopolitical tensions and potential trade restrictions between the U.S. and China pose risks, as approximately 20% of TXN's 2024 revenues are derived from the Chinese market [6] Group 2: Recovery Strategies - TXN is strategically building its inventory to $4.5 billion, allowing for quick response to customer demand when the market rebounds [9] - The company has received$1.6 billion in CHIPS Act funding to support new 300mm wafer fabs in Texas and Utah, enhancing its position as a reliable supplier of analog and embedded chips [10] - TXN is entering the edge AI market with the launch of the TMS320F28P55x Series, which includes an integrated Neural Processing Unit, capitalizing on the projected growth of the global edge AI market to $269.82 billion by 2032, with a CAGR of 33.3$17.1 billion, indicating a year-over-year growth of 9%, with earnings estimated at $5.35 per share, suggesting a 2.9% year-over-year increase [12] - TXN has consistently beaten the Zacks Consensus Estimate in the past four quarters, with an average surprise of 8.9% [12] Group 4: Conclusion - Despite current challenges, TXN is maintaining healthy inventory levels and establishing new manufacturing units, positioning itself for a rebound once the cyclical downturn subsides [13][14]