Texas Instruments Faces Demand Challenges Amid Market Rally

The semiconductor manufacturer Texas Instruments Incorporated (NASDAQ:TXN) experienced a decline in its stock value, reflecting slower-than-expected demand recovery in its core industrial and automotive markets. This was highlighted in the third-quarter 2025 investor letter from Diamond Hill Capital, an investment management firm that oversees the Diamond Hill Large Cap Fund.

According to the letter, which was released in early November, the broader market continued its upward momentum in the third quarter, with the Russell 3000 Index gaining 8% and bringing year-to-date returns to over 14%. In contrast, the Diamond Hill Large Cap Fund underperformed, with its portfolio declining during the same period. As of November 6, 2025, Texas Instruments closed at $161.38 per share, with a market capitalization of approximately $146.634 billion. Over the past year, the company’s stock has decreased by 26.74%, with a one-month return of -6.01%.

In its analysis, Diamond Hill Capital noted that alongside Texas Instruments, other underperformers included American International Group (AIG) and Colgate-Palmolive. The firm stated, “Shares of semiconductor manufacturer Texas Instruments declined as demand in its core industrial and automotive end markets has recovered slower than expected. However, we maintain our conviction in the company’s competitive advantages in manufacturing, product breadth and direct distribution, and anticipate these headwinds will be short term.”

Despite the recent challenges, Texas Instruments reported revenue of $4.7 billion for the third quarter, aligning closely with market expectations. This figure represented a sequential increase of 7% and a year-over-year increase of 14%. While the firm recognizes the investment risks associated with Texas Instruments, it expressed a belief that other stocks, particularly those related to artificial intelligence, may offer greater potential for higher returns within a shorter timeframe.

At the end of the second quarter, 68 hedge fund portfolios included Texas Instruments, down from 69 in the previous quarter. The company is not featured on the list of the 30 most popular stocks among hedge funds, indicating a potential shift in investor sentiment.

As markets continue to evolve, investors may want to consider various factors when evaluating stocks like Texas Instruments. The semiconductor industry remains critical to technological advancement, but recent demand fluctuations may require a reevaluation of growth potential.

For those interested in further insights, Diamond Hill Capital has provided additional resources and investor letters pertaining to the third quarter of 2025, which can be accessed through their official channels.

In summary, while Texas Instruments navigates current market challenges, its long-term competitive advantages may still position it favorably in an evolving landscape, particularly as demand dynamics shift in key sectors.