Texas Instruments Incorporated (NASDAQ:TXN) was among the best-performing semiconductor names last year. Increased demand for chips amid a supply crunch led to robust 2021 gains. The company held strong this year, but escalating headwinds have hit the stock.
TXN is down 17% year-to-date. This year’s slowdowns have been due to Chinese lockdowns. In its first-quarter results in April, Texas Instruments recognized the weakness. The company guided a second-quarter revenue between $4.20 billion and $4.80 billion.
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The revenue was below estimates of $4.94 billion. The company attributed the weak guidance to Covid-19 lockdowns in China. Texas Instruments still reported $4.91 billion in sales in the first quarter. The revenue exceeded the $4.74 billion estimates, indicating the company’s strengths.
A sector overview shows Texas Instruments is suffering the same fate as rivals. The SPDR S&P Semiconductor ETF has fallen by 32% year-to-date. The weakness has not abated despite a continued easing of restrictions in China.
This thesis postulates that investors could also be scared by the high valuations of semiconductor names. Investors could already be taking profits after a Covid-19 surge. As a result, TXN will continue to fall in the short and medium term.
Bearish TXN could fall up to $134
Technically, TXN is bearish after breaking below key support at $162. The support has held prices this year. A break below heightens the already building bearish momentum. We expect the stock to continue falling in the foreseeable future. The stock could decline up to the potential support at $134.
Summary
Texas Instruments is facing more bearish weakness. A second-quarter guidance miss increased the bearish pressure amid sector weaknesses. The stock could fall to find support at $134.
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