Texas Instruments shares rally on strong Q1 guidance as Diamond Hill Capital highlights semiconductor recovery

Texas Instruments Incorporated shares rallied after the semiconductor manufacturer issued first-quarter 2026 guidance that exceeded market expectations, signalling a recovery in demand following a prolonged industry downturn. The company reported first-quarter revenue of $4.8 billion, representing a 9 per cent sequential increase and a 19 per cent year-on-year rise.

Diamond Hill Capital, a First Eagle Investment Management company, highlighted the stock in its Q1 2026 investor letter for its Large Cap Strategy. The strategy declined 2.39 per cent net of fees in the quarter, trailing the Russell 1000 Value Index’s 2.10 per cent return. Performance was positively affected by stock selection in industrials and consumer discretionary, while information technology, financials, and health care were the largest detractors from relative performance.

Texas Instruments closed at $309.21 per share on May 22, 2026, with a market capitalisation of $281.41 billion. The stock’s one-month return was 14.73 per cent, and it gained 75.39 per cent over the past 52 weeks. At the end of the fourth quarter, 78 hedge fund portfolios held Texas Instruments, up from 72 in the previous quarter.

The broader market context includes uncertainty due to the war in Iran, which supported the portfolio’s focus on oil-sensitive exploration and production companies. Technology companies faced pressure in Q1 amid concerns about AI's potential negative effects on their businesses, though Diamond Hill noted their competitive advantages remain stronger than current valuations suggest.

Despite these challenges, the market is expanding into more attractive opportunities in defensive sectors and cyclicals that do not benefit from AI. Texas Instruments is a semiconductor manufacturer providing chips and solutions for electronics designers and manufacturers.