Stock Market Impact: Shares of Texas Instruments (NASDAQ:TXN) rose 59% quarter‑to‑date, Analog Devices (NASDAQ:ADI) up 25%, and ON Semiconductor (NASDAQ:ON) up 88%; BofA expects further upside as multi‑year content gains are still under‑estimated by Street estimates.
Listed Companies and Sectors:
Texas Instruments: BofA raised the price objective to $370 from $320, using a 40× CY27 price‑to‑earnings multiple. TXN’s data‑center business generated approximately $1.5 bn in sales for CY25, reflecting 64% year‑over‑year growth, and grew 90% YoY in Q1. BofA projects the data‑center opportunity could reach about $4.5 bn by CY28, representing up to 18% of overall sales (up from roughly 12% currently).
Analog Devices: AI exposure run‑rate stands at $2 bn, with $1.2 bn attributed to core data‑center activities and roughly 40% tied to automated test equipment (ATE). Optics and power each account for 50% of ADI’s sales; within power, one‑third comes from protection (where ADI holds a leading share) and another third from power control. BofA estimates AI sales, excluding ATE, could reach $3.3 bn by CY28, or up to 17% of total sales.
ON Semiconductor: BofA raised the price objective to $138 from $115, based on a 32× CY27 PE multiple. AI sales currently represent about 4% of the product mix but have doubled YoY, exceeding a $250 million annual run‑rate. The firm projects AI sales could climb to $1.6 bn by CY28, a more than 6× increase and nearly 20% of total sales. BofA also highlighted improving China electric‑vehicle trends in the second half of the year, noting ON’s 55% share in that market.
Investment Flows: The upgraded price targets and strong growth forecasts for AI‑related semiconductor revenue may attract additional foreign portfolio investment into the sector, especially given the highlighted tailwinds from data‑center expansion and China EV demand.
Interest Rates, Inflation, and Liquidity: No direct references were made in the article.
Fiscal or Monetary Policy: No direct references were made in the article.
