We recently compiled a list of the 10 Undervalued Chip Stocks Near 52-Week Lows. In this article, we are going to take a look at where Texas Instruments Incorporated (NASDAQ:TXN) stands against the other undervalued chip stocks.
Energy and EV stocks continue to be in focus as Donald Trump signs a bunch of executive orders that will have far-reaching impacts on many industries. He even revoked an executive order related to AI, though it addresses a matter that may not directly impact a company’s sales in the near term. AI stocks are going under the radar for a few weeks but with earnings season about to get into full gear, we may not have the same opportunities in a couple of weeks that we have now.
Many of the chip stocks continue to stay undervalued. The main reason is the lack of demand in the niche industries that these companies serve. But this demand will eventually shift at some point in 2025, which is what makes them so attractive to consider at this point.
We came up with 10 stocks that we believe are undervalued, near their 52-week lows, and present good investment opportunities. To come up with the 10 undervalued chip stocks that are near 52-week lows, we only considered stocks with a market cap of between $10 billion and $200 billion that hit their 52-week lows recently.
Close-up of Silicon Die are being Extracted from Semiconductor Wafer and Attached to Substrate by Pick and Place Machine. Computer Chip Manufacturing at Fab. Semiconductor Packaging Process.
A robotic arm in the process of assembling a complex circuit board – showing the industrial scale the company operates at.
Texas Instruments Incorporated (NASDAQ:TXN)
When the CHIPS ACT was introduced by the Biden government in Aug 2022, Texas Instruments was considered one of the biggest beneficiaries. The company doubled down on expansions on the back of this government support and built capacity it wouldn’t even need in the next 5 years. This didn’t sit well with some investors and the company even had to deal with an activist investor along the way. More than two years later, the company’s stock price stands exactly where it was when the legislation was introduced.
The stock’s returns since 2021 are dismal. The company’s management has to take part of the blame, as it prioritized expansions at the expense of shareholder value. The long-term value generated by the company’s plans is clearly not being respected by the shareholders. This could change soon though. Donald Trump’s Secretary of Commerce pick has made clear that the CHIPS ACT will continue during the Trump government. There is a concern that the scheme may be paused for reconsideration. Intel and Samsung are two companies that have fared even worse than TXN and don’t have a very optimistic outlook. So the money may be diverted to companies that can use it better.
TXN has so far received $1.6 billion under the CHIPS ACT and if that continues, the company won’t have any issue materializing its grand expansion plans. The company is building 4 fabs in Sherman Texas, the first of which will be production-ready this year. When the effects of that trickle down to the bottom line, investors will be happy to price in the next 3 fabs as well, and with it, a sizable chunk of the future growth too, making it an attractive buy at these levels.
Overall TXN ranks 9th on our list of the undervalued chip stocks near 52-week lows. While we acknowledge the potential of TXN as a leading AI investment, our conviction lies in the belief that some 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 as promising as TXN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
