BofA Securities has flagged analog semiconductor names as attractive bets as the market transitions from an inventory-driven phase to one led by demand restocking. The firm argues that analog chips combine defensive industrial exposure with long product cycles, solid free cash flow generation and participation in secular growth themes that extend beyond single-cycle dynamics.
At the sector level, management teams are now signaling a shift in timing compared with past cycles. Instead of the more common pattern of stronger first-half results, companies are pointing to a more robust second half supported by clearer backlog visibility and healthier underlying demand. BofA projects that diversified semiconductor sales growth among top suppliers will accelerate to 19% in 2026, up from 1% in 2025, and that a compound annual growth rate of 12% is achievable through 2028.
Texas Instruments
BofA singles out Texas Instruments as its top pick within analogs, noting the company enefits from wide industrial exposure and potential utilization upside as the recovery broadens. The firm highlights favorable setups for the second and third quarters, where revenue growth is increasingly tied to improving unit demand rather than being driven primarily by inventory adjustments.
Secular demand drivers cited include AI infrastructure, electrification, automation and aerospace and defense, each providing incremental support to TI s end markets recover. Management at the company describes broad industrial demand as still below prior-cycle peaks despite several quarters of recovery, which BofA reads as evidence of remaining runway for expansion. The firm also observes that AI-related revenue streams for TI appear on track to grow by 50-100% or more this year, with demand extending from rack-level systems into power infrastructure.
Separately, Stifel has reaffirmed a Buy rating on Texas Instruments, pointing to year-to-date data that show a 22% year-over-year increase in general purpose analog billings.
ON Semiconductor
BofA positions ON Semiconductor to benefit from a combination of improving automotive fundamentals and growing AI power applications. While the report underscores that automotive fundamentals remain mixed on a global basis, it notes that many suppliers are now shipping at consumption levels rather than working through inventory corrections. That shift, the firm says, creates a healthier setup for the second quarter and into the second half of 2026.
The firm emphasizes ON orporate exposure to both a recovering auto market and expanding AI power opportunities as important drivers of potential upside. In corporate moves consistent with reshaping its portfolio, ON announced an all-stock acquisition of Synaptics with an enterprise value of approximately $7 billion. The company has also entered agreements to divest manufacturing facilities in the Philippines and Pennsylvania as part of efforts to optimize its production footprint.
Analog Devices
BofA expects Analog Devices to gain from accelerating demand across industrial and infrastructure end markets as the sector recovery gains traction. The firm reports that bookings, backlog and order activity are improving across most regions and submarkets. It also points to signs of broader macro stabilization - including improving PMIs, leaner channel inventories and stabilizing industrial production - as factors that support recovery efforts across factory automation and wider industrial markets.
Analog Devices recently reported fiscal second-quarter revenue and adjusted earnings that exceeded both management guidance and consensus expectations. The company also completed the acquisition of Empower Semiconductor, a step the firm says expands Analog Devices apabilities in power delivery for AI computing systems.
Across the names discussed, BofAmphasizes that the shift from inventory correction to demand-led restocking and improving backlog visibility underpins its more positive view for the second half of the year and into 2026. The analysis highlights links to AI-related power needs, automotive consumption trends and ongoing industrial recovery as central to the bullish case for analog semiconductors.