There's a corner of the artificial intelligence trade that hasn't been as flashy as memory giants Micron (MU) or SK Hynix (SKHY), but Wall Street says it could be poised for a strong run.
Analog chipmakers, which provide the components that manage power flow in everything from cars to data centers, have emerged as beneficiaries of the AI infrastructure boom.
"AI is increasingly becoming a meaningful analog opportunity, with demand extending beyond the rack into power infra," Bank of America analyst Vivek Arya wrote in a note Monday.
The firm expects most AI-related sales across the analog chip group to grow 50% to more than 100% this year as analog chips become increasingly important, given that AI data centers require massive amounts of power management.
Unlike memory chips, analog semiconductors are tied to a much wider range of industries, including factory automation, electronics, aerospace and defense, and power infrastructure.
BofA noted that after a prolonged inventory correction, customers are beginning to restock analog hardware as industrial demand improves, creating a positive 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 wrote.
Bank of America sees Analog Devices (ADI) as one of the biggest winners in the recovery, pointing to its strong position in industrial markets and growing demand for chips used in AI data center power systems.
The stock is up more than 40% year to date, but BofA sees an additional 19% in upside over the next year with a price target of $460.
ON Semiconductor (ON), up 68% since the start of 2026, could also see further gains as the auto market improves and demand grows for chips that help power AI infrastructure.
Texas Instruments (TXN) is expected to benefit as well as chip demand improves and its factories run at higher capacity. The stock is up more than 70% over the past six months, and BofA analysts forecast the shares could reach $370 over the next year.
Allegro MicroSystems (ALGM), which has climbed more than 90% year to date, is another name highlighted by BofA. The firm sees growth opportunities from AI-related power needs and the increasing number of chips used in vehicles.
Ines Ferre is a Senior Business Reporter for Yahoo Finance covering the US stock market, publicly traded companies, and commodities.
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