In this article, we will take a look at the 15 Stocks Targeted By Activist Hedge Funds.
Shareholder activism continued at a record pace in 2024 as activist hedge funds pushed for strategic changes in various companies to unlock hidden value. In the first nine months of the year, 184 activist hedge fund campaigns were up and running, 26% above the four-year average. The surge came as new activists joined the fray and spearheaded 22% of the campaigns.
Why Was Shareholder Activism on The Rise?
A number of factors can be emphasized. One is the global economy cooling down. Although the US economy appeared to be on track to a soft landing, as many experts had predicted, economic growth remained timid, and other nations like Germany were on the verge of going into recession.
The rise of so-called ESG investing is another factor contributing to increased shareholder activism. Environmental, social, and governance, or ESG, is a relatively recent trend in which investors purchase stock in a company for its intrinsic value and because it performs well on ESG metrics. Some activist investors have positioned themselves as ESG-focused in the midst of this trend.
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Nevertheless, only 30% of the top ten activist investors accounted for the total campaigns in 2024, down from 46% in the same period in 2023. On the other hand, most of the campaigns were less successful in breaking into company boardrooms as management fought back.
Management pushed back on several campaigns even as activist hedge funds were forced to settle on management changes. Additionally, as investors’ newfound freedom to choose between management and dissident slates makes it easier to get representation on boards, the universal proxy card continues to lead to more settlements between activists and businesses.
Even though winning board seats isn’t the main goal of every campaign, the quantity of victories indicates how well businesses are defending themselves. Dissidents won 74 seats in the first half, compared to 93 in the same period in 2023. Activists only secured 11% of the seats they were vying for in US proxy elections, compared to 65% in 2023.
Similarly, a push for company sales by activist hedge funds hit a snag as buyouts throughout the year were scarce owing to the high interest rate environment. High interest rates made it difficult for companies to access cheap capital that they could use to complete acquisitions.
According to Jim Rossman, head of the Barclays advisory group, there hasn’t been much merger and acquisition activity in the past two years. The activists’ preferred method of obtaining value from a company’s stock is weakened as a result. The most frequent demand of activists is still M&A, but they are now more focused on altering a company’s board and management.
“Activism has become increasingly sophisticated as a tactic,” says Rossman, who sees firms hiring bankers, lawyers and private equity veterans. “There’s a greater depth of understanding on how to unlock value in companies.”
As corporate board nominations open in the new year, the pace of activism is expected to increase in the upcoming months. According to Rossman, activist demands for M&A may resurface in 2025 as private equity firms look to use their growing cash and their current holdings.
Activist hedge funds typically have minority, long interests in underperforming businesses that have significant potential for value development. Since value investors make up the majority of activist investors, they must first find undervalued companies.
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Our Methodology
To make our list of stocks targeted by activist hedge funds, we looked for companies that made the headlines in the context of renowned activist investors taking a position. We then ranked these companies based on their latest market capitalization.
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15 Stocks Targeted By Activist Hedge Funds
15. Wolfspeed, Inc. (NYSE:WOLF)
Company Market Cap as of December 31: $850.57 Million
Number of Hedge Fund Holders: 26
Wolfspeed, Inc. (NYSE:WOLF) is a technology company that focuses on silicon carbide and gallium nitride (GaN) technologies. Despite the growing demand for semiconductors and related technologies, it was one of the hardest-hit stocks in 2024. The stock ended the year down by 84% as it emerged as one of the stocks targeted by activist hedge funds.
The underperformance came despite growing demand for Wolfspeed Silicon carbide products as they offer greater efficiency and reduced system size in chip development. Wolfspeed, Inc. (NYSE:WOLF) remains well-positioned to benefit from the artificial intelligence market expansion, which is expected to fuel demand for SiC products.
Activist investor Jana Partners has already built a significant position in the semiconductor manufacturer. The hedge fund is urging the company to consider resolving the staggering erosion of shareholder value. In a letter to the board, the hedge fund touted Wolfspeed, Inc.’s (NYSE:WOLF) differentiated manufacturing capabilities that give it intrinsic value.
Jana Partners wants management to explore boosting share price by increasing gross margins. It’s also pushing for a potential sale of the device business and partial sale of the silicon wafer business to a strategic partner as one of the ways of unlocking hidden value. It also urged management to consider the sale of the company as one of the ways of unlocking value.
ClearBridge All Cap Growth Strategy stated the following regarding Wolfspeed, Inc. (NYSE:WOLF) in its Q3 2024 investor letter:
“We also exited long-time holding Wolfspeed, Inc. (NYSE:WOLF), a leading global supplier of silicon carbide substrate wafers and devices. After giving management ample time to ramp production at its new Mohawk Valley facility, we closed the position due to continued execution missteps and cyclical headwinds impacting electric vehicle, industrial and energy applications that have repeatedly pushed the company’s path to profitability further out.”
14. Fortrea Holdings Inc. (NASDAQ:FTRE)
Company Market Cap as of December 31: $1.67 Billion
Number of Hedge Fund Holders: 26
Fortrea Holdings Inc. (NASDAQ:FTRE) is a biotechnology company that provides biopharmaceutical products and medical device development services. It also provides outsourced R&D services to pharmaceutical, biotechnology, medical device, and diagnostics industries. It is one of the stocks targeted by activist hedge funds after underperforming in 2024. The stock was down by about 45%. Activist hedge fund Corvex Management took a stake in the company and started pushing for strategic changes.
Corvex Management launched a campaign agitating for the sale of non-core assets as one of the ways of unlocking value and ensuring focus on core business. It also reiterated that the stock should be worth $25 to $27 a share, focusing on improving the margin on earnings before income tax depreciation and amortization.
The activist hedge fund reiterated that Fortrea Holdings Inc. (NASDAQ:FTRE) should focus on improving its margins or become a target for buyers. Corvex is not the only activist hedge fund that owns a stake in the company. Starboard Value also acquired stakes in 2023 and reiterated plans to push for changes to boost margins, among other initiatives.
According to Starboard, Fortrea Holdings Inc. (NASDAQ:FTRE) is ideally positioned as a sizable and diverse international contract research organization, or CRO, offering drug and other research-management services to pharmaceutical, biotech, and medical device companies.
13. Upwork Inc. (NASDAQ:UPWK)
Company Market Cap as of December 31: $2.19 Billion
Number of Hedge Fund Holders: 24
Upwork Inc. (NASDAQ:UPWK) is a communication services company that operates a working marketplace that connects businesses with various independent professionals and agencies. The company’s work marketplace provides access to talent with multiple skills across a range of categories. While the stock was up by about 14% in 2024, it underperformed the overall market.
Consequently, activist investor Engine Capital acquired a 4% stake in the company and started agitating for a shakeup of the board. In a letter to the board, the activist hedge fund reiterated that management needed to fix the platform’s foundational issues. The activist hedge fund also reiterated that the company is underperforming its closest peer, Fiverr.
Engine Capital has since urged Upwork Inc. (NASDAQ:UPWK) to focus on simplifying its platform and enhancing user experience. Likewise, it wants the management team to prioritize cutting costs and growing its enterprise business.
Upwork Inc. (NASDAQ:UPWK) delivered impressive third-quarter results on November 8, 2024. Revenue logged in was up 10% year over year to $193.8 million, beating the consensus estimate of $182 million. Earnings also came above analysts’ estimates at $0.29 a share. The quarterly results were better than expected as the online employment marketplace integrated artificial intelligence features into its platform to help customers and freelancers complete projects. The number of clients engaging in AI-related projects on the platform was up 30%.
Pernas Research stated the following regarding Upwork Inc. (NASDAQ:UPWK) in its Q3 2024 investor letter:
“Upwork Inc. (NASDAQ:UPWK) is a leading global platform in the online freelance marketplace, connecting businesses with independent professionals (freelancers) for collaboration. The stock has fallen by approximately 85% from its peak due to concerns over slowing growth and fears of AI disruption. However, our analysis suggests these concerns are overstated. The growth slowdown is primarily due to temporary cyclical factors, while the long-term trend of businesses increasingly turning to skilled freelancers remains strong. Although market sentiment views Upwork’s business case as weakening, we see it as strengthening. We estimate a 70% upside potential from current levels, making Upwork a compelling long-term investment. Long form write-up here.”
12. Match Group Inc. (NASDAQ:MTCH)
Company Market Cap as of December 31: $8.21 Billion
Number of Hedge Fund Holders: 58
Match Group Inc. (NASDAQ:MTCH) is a communication services company that provides dating products. Its portfolio of brands includes Tinder, Hinge, and Match, each built to increase users’ likelihood of connecting with others. After underperforming in the first half of 2024, it was one of the stocks targeted by activist hedge funds as the year came to a close.
Starboard Value amassed a 6.5% stake in the online dating company and started pushing for changes that would result in margin improvements. The activist hedge fund also pushed for the company to consider going private. In a letter to the company’s board, the hedge fund urged management to consider cutting costs and focus on product innovation to bolster margins and fuel revenue growth.
The activist campaign came as Match Group Inc. (NASDAQ:MTCH) was struggling with leadership turnover and a significant decline in active users of its dating apps. Tinder, one of the company’s flagship apps that had enjoyed enviable growth in the previous years, has been stymied amid sluggish innovation. Elliott Investment Management is the other activist investor that has stakes in the MTCH, having succeeded in securing two seats on the board.
11. Southwest Airlines Co. (NYSE:LUV)
Company Market Cap as of December 31: $20.16 Billion
Number of Hedge Fund Holders: 36
Southwest Airlines Co. (NYSE:LUV) is a passenger airline company that provides scheduled air transportation services. It is one of the stocks targeted by activist hedge funds as it tried to bounce back from the slowdown triggered by the Covid-19 pandemic. The US airline giant has been under pressure from activist investor Elliott Management, pushing for management and other strategic changes.
Blaming the airline for its poor performance, Elliott Investment Management started a campaign to remove CEO Bob Jordan and replace two-thirds of Southwest’s board of directors. Southwest Airlines Co. (NYSE:LUV) responded by unveiling several measures that it hopes will reinvigorate growth prospects amid soaring activist pressure.
Part of the changes that the airline has been working on include the sale of vacation packages and leased back transactions of aircraft to boost investor confidence. Additionally, Southwest Airlines Co. (NYSE:LUV) declared that it was moving away from open seating and toward assigned seats, a major recommendation made in a 51-page presentation to the airline’s board by Elliott Investment Management.
By 2027, Southwest Airlines Co. (NYSE:LUV) anticipates the actions will result in an additional $4 billion in earnings before interest and taxes (EBIT). In three years, it anticipates generating over $1 billion in free cash flow, a minimum operating margin of 10%, and a 15% return on its capital investment. The airline also announced a new share buyback program worth $2.5 billion.
10. Illumina, Inc. (NASDAQ:ILMN)
Company Market Cap as of December 31: $21.19 Billion
Number of Hedge Fund Holders: 54
Illumina, Inc. (NASDAQ:ILMN) is a healthcare company that offers sequencing and array-based solutions for genetic and genomic analysis. It is one of the stocks targeted by activist hedge funds, having underperformed in 2024. Icahn Enterprises was the first activist hedge fund to set sights on the company.
Billionaire investor Carl Icahn launched a campaign to oust the board as he sought to reinvigorate the company’s growth metrics. The push came as the company pushed with the $7 billion acquisition of gene sequencing company GRAIL. While regulators in the US and Europe opposed the deal, terming it anti-competitive, Illumina, Inc. (NASDAQ:ILMN) ended up completing it.
Icahn had been critical of the $7 billion acquisition, which formed the basis of a proxy fight. Amid soaring regulatory and activist pressure, Illumina was forced to spin off Grail mid-last year, resulting in it keeping a 14.5% minority stake. Following the proxy fight and divestment, Keith Meister, activist investor at Corvex, also bought a stake in Illumina, Inc. (NASDAQ:ILMN), waiting to see if he will push for strategic changes to unlock shareholder value.
9. Kenvue Inc. (NYSE:KVUE)
Company Market Cap as of December 31: $40.93 Billion
Number of Hedge Fund Holders: 46
Kenvue Inc. (NYSE:KVUE) is a consumer health company. Its Self Care segment offers cough, cold and allergy, pain care, digestive health, smoking cessation, eye care, and other products. Its Skin Health and Beauty segment provides face and body care, hair, sun, and other care products. Having underperformed for the better part of 2024, the company was scrutinized by activist hedge fund Starboard Value.
Starboard is reportedly pushing the consumer goods behemoth to examine the pricing of its products and positioning of its brands. Kenvue Inc.’s (NYSE:KVUE) Skin Health & Beauty division, which reported the worst results in the most recent quarter, is another idea that the activist hedge fund is considering as a potential spin-off as one of the ways of unlocking hidden value.
Kenvue Inc. (NYSE:KVUE) has a portfolio of well-known consumer brands and works in the CHPC & Beverages industry in the United States. In 2024, the company reached a major turning point in its corporate history when it successfully separated from Johnson & Johnson. In certain of its product categories, Kenvue has been losing market share.
Analysts point to the Skin Health & Beauty segment as a key factor influencing the performance of the company’s stock, and this trend has been especially apparent there. For Kenvue Inc.’s (NYSE:KVUE) brands in the beauty market, the pressures of competition present constant difficulties.
8. Norfolk Southern Corporation (NYSE:NSC)
Company Market Cap as of December 31: $53.10 Billion
Number of Hedge Fund Holders: 47
Norfolk Southern Corporation (NYSE:NSC) is an industrial company that engages in the rail transportation of raw materials, intermediate products, and finished goods. It transports agriculture, forest, and consumer products. While the stock was flat for the year in 2024, it was one of the stocks targeted by activist hedge funds for the better part of the year.
Ancora Advisors was the first activist hedge fund to launch a campaign urging investors to vote to replace the company’s chief executive, Alan Shaw, and appoint new directors to its board. The campaign came after one of the company’s freight trains was involved in an accident in Ohio that spilled hazardous chemicals.
Nevertheless, the hedge fund pushed for management change, overhauling the company’s business strategy to help bolster profits. Norfolk Southern Corporation (NYSE:NSC) was forced to strike a deal with the activist hedge fund to avert a second proxy fight. The agreement expanded the company’s board to 14 from 13, giving the activist investor seven seats. The deal follows the ousting of former CEO Alan Shaw over an inappropriate workplace relationship with the company’s chief legal officer.
Amid the activist campaign, Norfolk Southern Corporation (NYSE:NSC) has embarked on a cost-cutting drive as it looks to drive value across its business. In the third quarter, the company reduced more than 130 crew starts per day and cut costs by 8%. It has also improved productivity in locomotive utilization, with an 18% boost in productivity and a reduction in fleet size.
7. CVS Health Corporation (NYSE:CVS)
Company Market Cap as of December 31: $56.49 Billion
Number of Hedge Fund Holders: 63
CVS Health Corporation (NYSE:CVS) is a healthcare company that provides health solutions. It offers traditional, voluntary, and consumer-directed health insurance products and related services. Down by about 44% in 2024, it is one of the stocks targeted by activist hedge funds disappointed by the underperformance.
CVS Health Corporation (NYSE:CVS) faced a challenging year, largely due to problems with its Medicare Advantage business. As a result, the company initiated a strategic review, leading to employee layoffs as part of a multibillion-dollar cost-cutting plan.
Activist hedge fund Glenview Capital launched an activist campaign against the company. The hedge fund laid out proposed fixes that it hopes will help fix the struggling business. Nevertheless, the hedge fund refuted claims that it proposed a breakup of the healthcare company as one of the ways of unlocking hidden value.
Glenview has already scored its biggest win, having secured four seats on the board. The board seats leave it in a strategic position to influence CVS Health Corporation’s (NYSE:CVS) direction as part of its activist campaign. CVS announced a new plan to reduce spending by $2 billion over a number of years. Among other things, the plan calls for increasing the use of artificial intelligence and streamlining operations. With 851 stores closed as of August, the company is also finalizing a three-year plan to close 900 of its locations.
6. Autodesk, Inc. (NASDAQ:ADSK)
Company Market Cap as of December 31: $63.55 Billion
Number of Hedge Fund Holders: 70
Autodesk, Inc. (NASDAQ:ADSK) is a technology company that provides worldwide 3D design, engineering, and entertainment technology solutions. The company offers AutoCAD Civil 3D, surveying, design, analysis, and documentation solutions. While the stock was up by 26% in 2024, it was the subject of an activist campaign by Starboard Value.
The activist hedge fund sent a letter to the company’s board demanding answers on what was behind an internal financial probe that sparked federal investigations. The hedge fund also wants answers on misrepresentation of key financial metrics. Starboard Value believes that Autodesk, Inc. (NASDAQ:ADSK) hasn’t gone far enough in addressing shareholder concerns, which caused its stock to drop 20% when it was announced, and that more executives than the company’s CFO were involved in the attempt to deceive investors.
To increase profitability and raise the share price, the activist hedge fund is currently looking to alter Autodesk’s management, operations, and financial accounting approach. It has prepared a thorough report outlining how this could be accomplished, along with a press release and letters to the board and other shareholders.
Additionally, Starboard Value thinks that Autodesk, Inc. (NASDAQ:ADSK) spends too much on marketing and sales in comparison to its competitors. Consequently, it should focus on real operating margin improvements to boost investor confidence.
Parnassus Mid Cap Fund stated the following regarding Autodesk, Inc. (NASDAQ:ADSK) in its Q3 2024 investor letter:
“In Software, we added Autodesk, Inc. (NASDAQ:ADSK) and Cloudflare while exiting Bill.com. We believe Autodesk’s dominant position in architecture, engineering and construction software allows it to increase margins and offer attractive revenue growth. Autodesk is a market-leading vertical software company with the ability to meaningfully improve its margins, while its revenue growth should accelerate as it completes its sales channel re-alignment.”
5. BP p.l.c. (NYSE:BP)
Company Market Cap as of December 31: $79.81 Billion
Number of Hedge Fund Holders: 36
BP p.l.c. (NYSE:BP) is an energy company that provides carbon products and services. It engages in the production of natural gas and integrated gas, as well as hydrogen and carbon capture and storage facilities. While the stock was down by about 16% in 2024, the underperformance was mostly fuelled by a slump in oil prices.
Amid the underperformance, it was one of the stocks targeted by activist hedge funds aggrieved by the company’s new strategy. BP p.l.c. (NYSE:BP) launched a high-profile push into renewable energy as it sought to cut its oil and gas output by 40% by 2030. Nevertheless, the push has turned out to be a big disappointment, with some of BP’s renewable investments generating disappointing returns.
Likewise, UK activist investor Bluebell Capital partners launched a campaign to have the company exit its renewable energy strategy. The activist investor started pushing the company to remove its chairman and lead independent director as part of its activist campaign.
BP p.l.c. (NYSE:BP) renounced its goal of reducing its oil and gas production by 2030 to win back investor trust. New CEO Murray Auchincloss also curtailed the company’s energy transition. The London-based business also retracted its plans for offshore wind in the United States, which led to significant impairments. Bluebell criticized recent earnings downgrades and questioned the company’s plans for solar expansion goals.
4. Starbucks Corporation (NASDAQ:SBUX)
Company Market Cap as of December 31: $103.46 Billion
Number of Hedge Fund Holders: 76
Starbucks Corporation (NASDAQ:SBUX) operates as a roaster, marketer, and retailer of coffee worldwide. Its stores offer coffee, tea, and other beverages, roasted whole beans, and ready-to-drink beverages. Starbucks was down by 2.5% in 2024. As inflation strains their finances, customers are going to coffee shops less frequently.
After struggling with sales in the US and China, Starbucks Corporation (NASDAQ:SBUX) became one of the most targeted by activist hedge funds. Elliott Investment Management was the first to accrue significant stakes in the coffee retailer concerned by its underperformance in recent years. The activist hedge fund consequently started pushing for strategic changes affected by the company’s negative investor return over the past five years despite posting strong growth in business.
Elliott Investment Management is yet to disclose its strategy at Starbucks Corporation (NASDAQ:SBUX). Nevertheless, activist hedge funds are best known for pushing for changes in leadership and strategy to boost shareholder value in companies in which they are involved.
Here is what Invesco Growth and Income Fund said about Starbucks Corporation (NASDAQ:SBUX) in its Q3 2024 investor letter:
“Starbucks Corporation (NASDAQ:SBUX): The coffee retailer has struggled with China’s economic softness, declining sales and weaker US store traffic that have hampered revenues and profit margins. However, we believe the company has several positive, long-term catalysts, including strong growth in store count, better labor relations, improving productivity from labor, technology and innovation, and easier future earnings comparisons. We believed a management change was imminent, and shortly after we purchased the stock, Starbucks named a new CEO, which was seemingly greeted enthusiastically by investors.”
3. Pfizer Inc. (NYSE:PFE)
Company Market Cap as of December 31: $150.35 Billion
Number of Hedge Fund Holders: 80
Pfizer Inc. (NYSE:PFE) is a healthcare company that discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products. The company offers medicines and vaccines in various therapeutic areas, including cardiovascular, metabolic, migraine, and women’s health. It is one of the stocks that underperform in 2024, going down by about 10%.
Amid the underperformance, it is one of the stocks targeted by activist hedge funds. Activist hedge fund Starboard Value acquired a $1 billion stake in Pfizer Inc. (NYSE:PFE) and started pushing for changes aimed at turning the company’s fortunes around. Parts of the modifications that hedge funds pushed for include management changes.
Reports indicated that the activist hedge fund had approached former executives Ian Read and Frank D’Amelio to help reinvigorate the healthcare company’s growth prospects. The activist campaign comes on Pfizer Inc.’s (NYSE:PFE) struggle to find a product to compensate for the lost revenue from its once-lucrative COVID-19 vaccine business.
The company’s sentiments took a significant hit in 2024 following a weaker-than-hoped launch of the respiratory syncytial virus vaccine, and clinical data from its obesity pill was disappointing. Pfizer Inc. (NYSE:PFE) has spent some $70 billion since 2020 on acquisitions while launching cost-saving initiatives to pursue new growth opportunities and strengthen its profit margins.
2. BlackRock Inc (NYSE:BLK)
Company Market Cap as of December 31: $158.77 Billion
Number of Hedge Fund Holders: 37
BlackRock Inc (NYSE:BLK) is a financial services company that operates as an investment manager. It provides its services to institutional, intermediary, and individual investors, including corporate, public, union, and industry pension plans. While the stock was up by about 28% in 2024, outperforming the overall market, it remains one of the stocks targeted by activist hedge funds.
Activist investor Bluebell Capital Partners is the latest to take a swipe of the investment manager over the latter’s ESG (environment, social, and governance) investing strategy. Bluebell Capital Partners is stepping up its efforts to challenge the largest asset manager in the world on the grounds that the latter’s ESG approach puts its reputation at risk.
Bluebell is back on the attack after a similar provocation in 2022 that resulted in no change to the fund’s strategy. It is believed that the company is planning to publish a critical analysis of the fund manager’s ESG-related direction. Additionally, Bluebell accused BlackRock Inc (NYSE:BLK) of being a hypocritical investor for not denouncing the Belgian chemical company Solvay, in which it owns stock, for disposing of waste in the Mediterranean.
The London Company Large Cap Strategy stated the following regarding BlackRock, Inc. (NYSE:BLK) in its Q3 2024 investor letter:
“BlackRock, Inc. (NYSE:BLK) – Shares of BLK rallied during 3Q as organic growth improved sequentially. Our long-term view of BLK has not changed. In the near-term, strong equity market performance is supportive of AUM and fee growth, and, visibility on declining interest rates is a potential tailwind to the fixed income ETF business. We continue to view BLK as a long-term share gainer with a broad spectrum of solutions, and we appreciate the strong balance sheet and steady capital return.”
1. Texas Instruments Incorporated (NASDAQ:TXN)
Company Market Cap as of December 31: $171.1 Billion
Number of Hedge Fund Holders: 57
Texas Instruments Incorporated (NASDAQ:TXN) is a technology company that designs, manufactures, and sells semiconductors to electronics designers and manufacturers. It offers power products to manage power requirements across various voltage levels. The stock was up by 10% in 2024, rallying to record highs as investors reacted to the company’s strategic positioning amid growing demand for chip technology.
Activist hedge fund Elliott Investment Management took a $2.5 billion position in the chip technology company. With the positioning, the hedge fund started agitating for the company to consider adopting a dynamic capacity management strategy. It also urged management to focus on achieving a free cash flow per share target of $9 a share by 2026.
Elliott claims that Texas Instruments Incorporated (NASDAQ:TXN) free cash flow has decreased by over 75% since the company began a significant capacity ramp-up in 2022 and that shareholders have received little information about when free cash flow per share will return to its historical average.
According to the activist investor, the company has expanded its capacity beyond the anticipated demand. Consequently, it is calling for the company to adopt a dynamic capacity management strategy to bolster per-share free cash flow.
Despite a poorer performance in Europe, Texas Instruments Incorporated’s (NASDAQ:TXN) automotive revenues have grown significantly, with strength in China making the difference. The company’s auto revenue growth from quarter to quarter was higher than anticipated. Furthermore, TXN has observed a broader cyclical recovery, with notable expansion in the fields of communications equipment, enterprise systems, and personal electronics, all of which are still below their prior peak levels.
The Diamond Hill Select Strategy likes Texas Instruments Incorporated (NASDAQ:TXN)’s long-term outlook, as revealed in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon, Texas Instruments Incorporated (NASDAQ:TXN) and Mr. Cooper Group. Shares of semiconductor manufacturing company Texas Instruments rose in Q2 as demand in several of the company’s end markets show signs of recovering. Given the company’s long-term prospects, competitive positioning and scale advantages, we believe the outlook for the company from here is strong.”
While we acknowledge the potential of TXN, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TXN but that trades at less than 5 times its earnings check out our report about the cheapest AI stock.
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