Analog Chipmakers Rally as AI Power Demands Drive Sector Growth
Analog semiconductor stocks are attracting investor attention as artificial intelligence data centers drive a surge in demand for power management components, signaling a broadening of the AI trade beyond memory chips.
Analog chipmakers are experiencing a surge in demand driven by the artificial intelligence infrastructure boom. Wall Street analysts note that these components, which manage power flow in data centers and vehicles, are poised for a strong performance.
Bank of America analyst Vivek Arya highlighted this shift in a note on Monday. "AI is increasingly becoming a meaningful analog opportunity, with demand extending beyond the rack into power infra," Arya wrote.
The firm projects that AI-related sales across the analog chip group will grow between 50 percent and over 100 percent this year. This acceleration stems from the massive power management requirements of modern AI data centers.
Unlike memory semiconductors, analog chips serve a diverse array of sectors. Their applications span factory automation, aerospace, defense, electronics, and broader power infrastructure.
A prolonged inventory correction is now giving way to restocking as industrial demand improves. This dynamic creates a favorable market backdrop for the second half of 2026.
"We continue to view analog semis as one of the more attractive areas of semis during periods of volatility given their combination of defensive industrial exposure, long product cycles, strong free cash flow generation and participation in many of the same secular themes driving broader semiconductor spending," Arya noted. This resilience makes the sector particularly appealing to institutional investors navigating broader market fluctuations.
Key Beneficiaries in the Supply Chain
Bank of America identifies Analog Devices as a primary beneficiary of this recovery. The company holds a strong position in industrial markets and sees rising demand for its data center power systems chips. Its stock has risen more than 40 percent year to date, with analysts projecting a 19 percent upside to a $460 price target over the next year.
ON Semiconductor has climbed 68 percent since the beginning of 2026. The company stands to gain from an improving automotive market and expanding AI infrastructure needs. Texas Instruments is also positioned to benefit as factory capacity utilization increases alongside chip demand. Its shares have jumped more than 70 percent over the past six months, with a forecasted target of $370 over the next year.
Allegro MicroSystems represents another highlighted opportunity, having surged more than 90 percent year to date. Analysts point to dual growth drivers from AI-related power requirements and the rising number of chips integrated into modern vehicles.
