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Further Reading from MarketBeat Media
AI Is Reviving an Overlooked Chip Category—and These 3 Names Are Riding the Demand WaveWritten by Nathan Reiff. Article Published: 4/29/2026. 
Key Points
- Texas Instruments' Q1 2026 results, including 22% analog chip revenue growth, signal improving conditions across the broader analog semiconductor sector.
- Analog Devices and Microchip Technology have each posted strong year-to-date share gains alongside earnings beats driven by AI, industrial, and automotive demand.
- onsemi's 70% year-to-date rally and $6 billion buyback program are tempered by a price-to-earnings ratio near 270 and a consensus price target well below current trading levels.
- Special Report: Elon Musk’s $1 Quadrillion AI IPO
Now may be a good time for investors to watch an often-overlooked corner of the semiconductor industry: analog chips. Why? Texas Instruments Inc. (NASDAQ: TXN), one of the primary domestic producers of these chips, recently posted notably strong earnings for the first quarter of 2026.
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Driving TI's 19% year-over-year (YOY) overall revenue growth was the firm's data-center business, which saw sales rise by about 90% over the same period. Analog chip sales were also a meaningful contributor, up 22% YOY. Analog chips don’t grab headlines the way leading-edge AI processors do, but they’re essential for power delivery and signal management in data centers, vehicles and industrial systems. After TI’s report suggested improving conditions, three analog-focused names stand out for different reasons — from AI-linked demand to automotive leverage to aggressive cash returns. Analog Devices: AI Tailwinds and an Industrial RecoveryAnalog Devices Inc. (NASDAQ: ADI) shares are up about 43% year-to-date, following a strong Q1 2026 performance that included $3.2 billion in revenue, up 30% YOY. The company’s AI-related businesses now account for roughly 20% of revenue, with an annualized run rate exceeding $2 billion. At the same time, industrial demand appears to be recovering and is forecast to continue growing through the first half of the year. Investors may also be drawn to Analog Devices' dividend profile: the yield is 1.12%, and the company’s annualized five-year dividend growth rate is 10.1% after an 11% payout increase in February 2026. Market share gains and healthy margins add to the appeal. Additionally, 27 of the 31 analysts who cover ADI have rated the stock a Buy. Microchip Technology: Automotive and Industrial Strength Helped Drive a Quarterly Sales BeatMicrochip Technology Inc. (NASDAQ: MCHP), a maker of analog semiconductor products, has experienced volatility over the past two years due in part to inventory mismatches and tariff effects. Still, MCHP shares are up just over 30% YTD, with most of the rally occurring in recent weeks. Amid a push to introduce new products and ramp manufacturing capacity, Microchip exceeded its internal sales target in the latest quarter, posting $1.19 billion in net sales and non-GAAP earnings per share of $0.44 — both above analyst expectations. Microchip is also active in automotive connectivity. In early February 2026 the company announced a collaboration with Hyundai Motor Group to explore 10BASE-T1S Single Pair Ethernet for next-generation in-vehicle architectures. That said, inventory and underutilized manufacturing capacity remain challenges that could persist for several years. Despite those headwinds, analysts maintain a generally positive view: 18 of 26 analysts rate MCHP a Buy, producing a consensus Moderate Buy rating. onsemi: Cash Returns Stand Out, But Valuation Questions Lingeronsemi (NASDAQ: ON), a maker of semiconductor components for managing electrical power and signals, has been a major beneficiary of the recent analog rally. The company’s shares have climbed nearly 73% YTD and look set to challenge prior highs. One of the main attractions is strong cash flow. onsemi generated a 24% free cash flow margin for 2025, an internal record that funded roughly $1.4 billion in buybacks and the launch of a new $6 billion repurchase program. Massive demand from AI data centers has helped: the company reported more than $250 million in AI revenue last year and expects sequential AI revenue growth of close to 20% in the current quarter. onsemi is reinvesting heavily in product development, and its analog/mixed-signal Treo platform has already seen strong traction in automotive and other markets. However, valuation is a legitimate concern. ON's price-to-earnings ratio is near 270, a very high multiple, even as analysts forecast roughly 39% earnings growth next year. Wall Street is divided: 15 analysts rate ON a Buy, 14 a Hold and one a Sell. ON shares are trading in the low $90s, well above the consensus price estimate of $67, leaving investors to weigh whether estimates should be revised or whether the stock could face a pullback. These three companies illustrate different ways to play the analog recovery: ADI for AI exposure and dividend growth, MCHP for automotive and industrial momentum, and onsemi for aggressive cash returns but higher valuation risk. Investors should balance growth prospects, execution risk and valuation when deciding whether to add analog-chip names to their portfolios. |
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