The Unsung Heroes of the AI Boom: Analog Chipmakers Surge

While the artificial intelligence trade is often dominated by memory giants, Wall Street is shifting its focus toward the unsung heroes of the infrastructure boom: analog chipmakers that manage power flow. Bank of America forecasts that this sector will continue to strengthen to meet the escalating energy demands of data centers.

Power Infrastructure Emerges as the New AI Battleground

The explosion in AI infrastructure has made energy management just as critical as processing power. Bank of America analyst Vivek Arya notes that AI is increasingly becoming a meaningful analog opportunity, with demand extending beyond the rack into power infrastructure.

■The firm expects most AI-related sales across the analog group to grow 50% to over 100% this year.

■Unlike memory chips, analog semiconductors are tied to a diverse range of industries, including factory automation, aerospace, defense, and power infrastructure.

■Following a prolonged inventory correction, customers are beginning to restock analog hardware as industrial demand improves.

Key Stock Picks and Projections for the Upcoming Cycle

Bank of America paints a positive picture for the second half of 2026, highlighting four specific companies poised to lead the recovery. Their defensive industrial exposure and strong free cash flow generation make them attractive during periods of volatility.

■Analog Devices (ADI): Up more than 40% year to date. BofA sees an additional 19% upside over the next year with a price target of $460, citing its strong position in industrial markets and AI data center power systems.

■ON Semiconductor (ON): Climbed 68% since the start of 2026. The stock could see further gains as the auto market improves and demand grows for chips powering AI infrastructure.

■Texas Instruments (TXN): Gained over 70% in the past six months. Analysts forecast the shares could reach $370 next year as chip demand improves and factories run at higher capacity.

■Allegro MicroSystems (ALGM): Surged more than 90% year to date. The firm sees growth opportunities from AI-related power needs and the increasing number of chips used in vehicles.

From my vantage point analyzing global supply chains, the narrative here extends beyond semiconductors; it is about the sustainability of the energy grid supporting the AI boom. The "hunger for power" in data centers signals a potential critical bottleneck in the supply chain for energy management components. Analog semiconductors act as the "hidden fuel" keeping the engines running in this digital storm; in volatile markets, these industrially exposed, cash-generative assets offer the calm of a safe harbor.