A new research note from Wells Fargo reveals that “power” is among the hottest buzzwords in third-quarter earnings calls so far, with mentions of “power,” “electricity,” or “energy” surging by more than 100% year-over-year among S&P 500 Index ($SPX) members, according to the firm. As hyperscalers scramble to secure power supplies for their ambitious data center projects, Wells Fargo writes, “Power remains our preferred way to play the AI capex cycle.” The AI Power Trade It’s an investing narrative that Ba ...

Core Viewpoint - Texas Instruments is facing increased pressure due to macroeconomic challenges and a high valuation, leading to a downgrade by Bank of America to Underperform and a price target reduction from $208 to $190 [1] Group 1: Analyst Downgrade and Valuation - Bank of America analyst Vivek Arya downgraded Texas Instruments from Neutral to Underperform, citing global tariff uncertainty as a factor limiting industrial demand recovery [1] - Texas Instruments is trading at a premium valuation of 25x/31x P/E on calendar year 2026 estimates, which is higher than Analog Devices despite lower free cash flow [2] Group 2: Financial Metrics and Projections - The trailing 12-month free cash flow margin for Texas Instruments is currently at 9%, with potential for expansion if capital expenditure decreases from $5 billion to $2 billion by 2026 [3] - The analyst has reduced the EPS estimate for fiscal 2026 by approximately 3% to $6.05, which is 8% below consensus, and for fiscal 2027 by 3% to $6.91, which is 13% below consensus [4] Group 3: Inventory and Demand Concerns - Weak demand may lead to lower fab utilization, which could pressure gross margins, especially with current inventory levels at 231 days compared to a five-year average of 174 days [3] - Historically, Texas Instruments has provided conservative fourth-quarter guidance, typically 3% below consensus for sales and 7% for EPS [4]