Analog Chips Are the Silent Winners of the AI Trade. These 3 Growth Stocks Are Capitalizing on the Opportunity.

In the years since the artificial intelligence megatrend kicked off, investors have heard plenty about graphics processing units (GPUs), AI accelerators, and memory chips, but there is another type of chip that is silently gaining momentum. Analog chips sit at the interface between real-world inputs -- things like temperature or voltage -- and the digital world. They function as sensors across a wide range of use cases, and also manage power flows throughout data centers to ensure that servers can draw power from the electric grid without putting themselves at risk of thermal damage.

These same types of chips convert electricity into data that GPUs and CPUs use. In other words, data centers can't operate without analog chips, so these products are guaranteed to gain more traction if data center construction continues to increase. These three growth stocks are riding the opportunity.

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1. Texas Instruments

Texas Instruments (NASDAQ: TXN) became a household name due to its calculators, but the classroom isn't the company's main moneymaker.

Its analog chips are essential for data centers, industrial facilities, aerospace, and automobiles. CEO Haviv Ilan cited "continued growth in industrial and data center" segments and "accelerated growth in automotive" when describing Texas Instruments' Q2 results, which featured 23% year-over-year revenue growth.

The analog segment did the heavy lifting, with that part of the business up by 29% year over year. That translated into an overall 13% sequential boost in revenue.

While it's normal for Texas Instruments to have sequential growth between Q1 and Q2, a 13% revenue jump between those two quarters is not normal. It's a sign that Texas Instruments' growth is accelerating due to the demand for AI infrastructure.

2. Analog Devices

Shares of Analog Devices (NASDAQ: ADI) have outpaced the S&P 500 (SNPINDEX: ^GSPC) with a 45% year-to-date gain. The company is poised to "capture value in the AI era," as CEO Vincent Roche noted in its fiscal 2026 third-quarter earnings release.

Analog Devices CFO Richard Puccio also cited strengthening demand across its product portfolio and said the company expects that momentum to continue into fiscal 2027. In fiscal 2026 Q3, revenue was up by 40% year over year, with net income more than doubling.

The company also follows a financially disciplined approach that would probably win over value investors like Warren Buffett. The company is quick to point out its 39% free cash flow margin and more than $24 billion in cash returned to shareholders over the past decade. Buffett likes companies that have strong positive free cash flow and engage in regular stock buybacks.

Analog Devices has also delivered a 9.5% annualized dividend growth rate over the past decade. The company combines prudent cash management with compelling growth opportunities in the AI era.

3. ON Semiconductor

ON Semiconductor (NASDAQ: ON) -- also known as onsemi -- produces analog chips and power solutions critical to data centers. CEO Hassane El-Khoury said in its latest earnings release that ON Semiconductor expects AI data center revenue to more than double in 2026, with overall revenue inching up by 9% year over year.

The company is more of a mixed business than the other two, which lean more heavily into analog chips. Investors should monitor its upcoming acquisition of Synaptics, which is expected to be finalized in mid-2027.

This acquisition will make it easier for onsemi to gain market share in the physical AI market. The move positions it as a leading provider of intelligent systems for physical AI, with the total addressable market expected to expand by $30 billion and reach $243 billion by 2030.

ON Semiconductor is already benefiting from current AI tailwinds and is well positioned to take advantage of future opportunities in technologies such as humanoid robots and self-driving vehicles. The company's client base is also well diversified, with more than 9,000 customers across end markets and 18 manufacturing sites in nine countries.

To top it off, onsemi has conducted $332 million worth of stock buybacks this year, boosting shareholders' returns. The company's Q2 press release highlighted that its year-to-date shareholder returns were roughly 105% of free cash flow, demonstrating prudent capital management.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Texas Instruments. The Motley Fool recommends ON Semiconductor and Synaptics. The Motley Fool has a disclosure policy.