Bank of America has singled out Texas Instruments (TXN), Analog Devices (ADI) and ON Semiconductor (ON) as the top choices within the AI power semiconductor group, saying the market may be underestimating multi-year increases in content per system as industrial and automotive demand turns positive.
The firm acknowledged that the shares have already posted notable gains recently, with Texas Instruments rising 59% quarter-to-date, Analog Devices up 25% and ON Semiconductor advancing 88%. Still, BofA argued potential content gains tied to AI deployments may not yet be fully reflected in consensus forecasts.
Texas Instruments
BofA boosted its price target on Texas Instruments to $370 from $320, applying a 40x price-to-earnings multiple on calendar-year 2027 earnings. The bank highlighted TXN as the largest analog supplier to the data center market, with roughly $1.5 billion in data center sales in CY25—equating to 64% year-over-year growth. BofA noted the data center segment expanded 90% year-over-year in the first quarter, driven chiefly by general-purpose amplifiers, clocking products and voltage references.
Looking ahead, the firm projects Texas Instruments' data center opportunity could expand to about $4.5 billion by CY28, which would represent as much as 18% of the company's total sales versus an estimated roughly 12% today.
Analog Devices
Analog Devices was described as carrying a roughly $2 billion AI exposure run-rate today, with about $1.2 billion tied to core data center activity and about 40% associated with automated test equipment (ATE). BofA said optics and power each account for 50% of sales within the cited exposure.
Within ADI's power mix, one third of revenue comes from protection products—where the firm is said to have a leading share position—and another third is derived from power control. Excluding ATE, BofA estimates ADI's AI-related sales could reach $3.3 billion by CY28, equating to up to 17% of total sales.
ON Semiconductor
BofA lifted its price objective for ON Semiconductor to $138 from $115, using a 32x CY27 price-to-earnings multiple. The bank said AI revenue today represents approximately 4% of ON's mix but has doubled year-over-year, already surpassing a $250 million annual run-rate.
BofA's scenario outlines AI sales for ON rising to $1.6 billion by CY28, a greater-than-sixfold increase that would approach nearly 20% of the company's total revenue. The bank also flagged improving China electric vehicle trends in the back half of the year as an ancillary tailwind for ON, noting a 55% share position in that segment.
Market context
BofA framed these recommendations around a thesis that content per system tied to AI and power management is a multi-year growth vector, and that recent rallies in share prices have not necessarily priced in the full scope of that potential. The bank's analysis focuses on data center exposure, optics and power product mixes, and the interplay between AI adoption and automotive electrification.