Generally, things are looking reasonably good for chip stocks right now. It’s not all roses and sunshine, however…just ask Texas Instruments (NASDAQ:TXN), which is down fractionally in Wednesday afternoon’s trading largely thanks to some new concerns out of Oppenheimer.
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Oppenheimer, as expressed via analyst Rick Schafer, noted that Texas Instruments was likely to suffer from several maladies, starting with “sustained margin pressure” thanks to some heavy spending on capacity improvements. Further, Schafer looks for a “…combination of under-utilization, increased depreciation and aggressive commodity PMIC pricing in China, (roughly equal to) 20% sales.” To top it off, Schafer also looks for the “battle of attrition” Texas Instruments is waging against smaller suppliers in China to continue “…for the foreseeable.”
Bad news, certainly. However, all is not lost for Texas Instruments, which other analysts regard as a “must-have in every dividend growth portfolio.” With semiconductor sales on the rise in general—thanks to the growing demand for all things digital—some believe another supercycle upward is brewing, and will hit between 2024 and 2026. Kind of a long time frame for investors, but knowing what we know about developments in cloud technology, cybersecurity, and the ongoing AI gold rush, not necessarily out of line.
Is Texas Instruments a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on TXN stock based on six Buys, 11 Holds and three Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average TXN price target of $182.89 per share implies 16.73% upside potential.
