In the fourth quarter of 2025, Texas Instruments Incorporated (TXN) experienced a downturn in its stock performance, despite the company reporting robust results. This dip was attributed to investor anticipation of a more rapid market rebound than what transpired. This insight comes from the Madison Large Cap Fund's investor letter for Q4 2025, which reviewed market trends and individual stock performances. While the S&P 500 demonstrated impressive growth, fueled predominantly by large technology firms, TXN's shares lagged, highlighting a discrepancy between market expectations and actual recovery pace in certain sectors.
The Madison Large Cap Fund, an investment advisory firm, issued its fourth-quarter 2025 investor letter, shedding light on market dynamics and their portfolio's performance. The S&P 500 achieved a 2.65% return in the quarter, culminating in a 17.9% annual return for 2025, with an impressive average annual growth exceeding 21% over the preceding three years. Initially, market leadership was characterized by High Beta and Momentum factors, indicating a concentrated participation. However, the fourth quarter witnessed a modest improvement in previously underperforming sectors such as Healthcare, Financials, and Consumer Discretionary. Despite this, the dominant force behind the S&P 500's overall ascent remained mega-capitalization technology companies, signaling a high level of stock concentration within the index.
Against this backdrop, the Madison Large Cap Fund (Class I) achieved a 3.43% appreciation, outperforming the S&P 500 Index's 2.65% return. Within their letter, the fund specifically addressed Texas Instruments Incorporated (NASDAQ:TXN), a key semiconductor manufacturer serving electronics designers and manufacturers. On February 24, 2026, TXN's stock closed at $213.35 per share, reflecting a -1.30% one-month return, though its shares had gained 7.62% over the past 52 weeks. The company commands a significant market capitalization of $193.855 billion.
The Madison Large Cap Fund's commentary on Texas Instruments Incorporated highlighted that while the company delivered strong results and its end markets were in the nascent stages of recovery, its shares underperformed expectations. This was primarily because investors had projected a quicker return to growth. Interestingly, despite its market presence, Texas Instruments Incorporated was not featured on the fund's list of the 30 Most Popular Stocks Among Hedge Funds. Nevertheless, the number of hedge fund portfolios holding TXN increased from 72 to 78 during the fourth quarter, indicating a growing, albeit cautious, interest.
The financial community's focus on rapid growth and recovery projections significantly influenced Texas Instruments' stock performance in late 2025. Despite the semiconductor giant's fundamental strength and promising signs of market recovery, the elevated expectations for an even faster rebound led to its stock's relative underperformance compared to the broader market and other high-growth sectors. This scenario underscores the critical role of investor sentiment and forward-looking estimates in shaping stock valuations, even for established industry leaders like Texas Instruments.