AI’s Biggest Bottleneck Could Make These 2 Stocks Soar

Key Points

• The shift from 48-volt to 800-volt power architectures in AI data centers and EVs is creating structural demand for analog chips from Texas Instruments and onsemi.
• Bank of America raised its price targets for both companies, setting onsemi at $138 and Texas Instruments at $370, citing data center growth as a key driver.
• Onsemi's $6 billion share repurchase program and 7.47% short interest create conditions that could amplify upside if the stock's operational catalysts continue to materialize.

While retail capital chases the computational firepower of AI logic chips, a more fundamental story is unfolding in the circuitry that powers them. The insatiable energy demands of next-generation data centers and electric vehicles (EVs) are forcing a non-negotiable architectural shift from legacy 48-volt systems to 800-volt platforms. This transition transforms analog power management integrated circuits (PMICs) from simple components into mission-critical bottlenecks.

Institutional capital is taking notice, quietly building positions in the gatekeepers of this power revolution. Two innovators, Texas Instruments NASDAQ: TXN and onsemi NASDAQ: ON, are positioned at the absolute epicenter of this supercycle. Armed with aggressive buybacks, recent sell-side upgrades, and the structural leverage to dictate the pace of AI expansion, they represent a compelling, and perhaps underappreciated, way to invest in the future of technology.

An AI Problem of Physics, Not Just Code

The AI boom is fundamentally an energy problem. As data center racks surpass 100 kilowatts of power density to support clusters of advanced GPUs, traditional 48V power distribution architectures are hitting a thermal wall.

The physics are unforgiving. Since power loss (as heat) is proportional to the square of the current (I²R), doubling the voltage from 400V to 800V cuts the current in half, thereby slashing energy losses by 75%. This move isn't just an optional upgrade; it is an economic and engineering necessity that allows for thinner, lighter copper wiring and dramatically less waste heat.

This is where the thesis for analog semis gains its power: these companies provide the sophisticated chips needed to safely and efficiently manage high-voltage environments.

Texas Instruments has evolved from being a component supplier to a core architectural partner for the biggest names in tech. The collaboration with NVIDIA NASDAQ: NVDA on a complete 800V DC power framework proves that next-gen logic cannot scale without a corresponding leap in power delivery.

By enabling a more direct, efficient power-conversion path from the 800V source to the processor, the technology developed by Texas Instruments drastically reduces the number of failure points and costly conversion stages.

onsemi is carving out a dominant position by focusing on intelligent power solutions. The acquisition of Aura Semiconductor's power IP directly targets the high-margin data center market, giving onsemi critical power-management technology at the point-of-load. Simultaneously, its silicon carbide (SiC) technology has become the gold standard for high-efficiency EV platforms.

At the 2026 Beijing Auto Show, onsemi's SiC solutions were featured in an estimated 55% of new EV models, including next-generation 900V platforms from global players like Geely OTCMKTS: GELYY and NIO NYSE: NIO, cementing its role as a key enabler of vehicle electrification.

Reading the Voltage on Corporate Confidence

An investor can learn a lot by watching how a management team allocates capital. In this regard, onsemi is sending one of the market's clearest signals. The board is actively executing a massive $6 billion share repurchase program, authorized in late 2025, giving it the mandate to retire nearly a third of its outstanding shares. Investors should see this as more than a financial maneuver; it is a statement of profound confidence from leadership that believes onsemi's stock price is fundamentally undervalued.

To fuel this aggressive buyback without throttling investment, onsemi recently announced a $1.3 billion convertible senior notes offering. This is a savvy move, providing immediate strategic capital to execute the buyback while protecting the R&D budget for critical technologies, such as its Treo platform, which saw staggering 2.5x sequential growth in Q1 2026. This use of intelligent leverage signals a belief that future stock appreciation will far outweigh the cost of debt.

Texas Instruments, a more mature and diversified player, demonstrates its strength through operational resilience. Management acknowledged some near-term choppiness in the Chinese automotive sector during its Q1 2026 earnings call, a potential macro headwind. Yet, Texas Instruments' financial performance shows that this weakness is entirely offset by growth in its Data Center and Industrial segments. The stock's exceptionally low short interest of 1.72% suggests that bears have largely given up betting against this diversified powerhouse.

Wall Street Flips the Switch on Price Targets

The sell-side is beginning to align with this powerful thesis. Bank of America recently raised its price targets for both companies. It raised its target for onsemi to $138, citing underappreciated content gains in AI data centers. It also lifted its Texas Instruments target to $370, forecasting that Texas Instruments' data center business alone could reach $4.5 billion by 2028, accounting for up to 18% of total sales.

This pivot is particularly relevant for onsemi. The stock still carries a significant short interest of 7.47%, representing over 29 million shares sold short. This creates a compelling technical setup. With management now confirming that the period of inventory digestion in its legacy automotive business is "largely behind us," the operational catalysts are aligning. A high short float, a massive corporate buyback, and a positive inflection in the core business create classic conditions for a potential short squeeze, where a rush of short covering could fuel upside volatility.

The Analog Opportunity: A Charged Path Forward

The core argument is simple: for every dollar spent on a high-powered AI logic chip, an increasing share must be allocated to the sophisticated analog technology required to power it efficiently and reliably. The secular shifts toward AI and vehicle electrification are structural, long-term tailwinds that appear poised to benefit both Texas Instruments and onsemi for years to come.

Of course, no investment is without risk. The semiconductor industry is historically cyclical, and both enterprises face intense competition and are subject to geopolitical risks associated with global supply chains. A broader economic downturn could also temper demand in their key industrial and automotive markets.

Given the strong year-to-date performance, where the stock price for Texas Instruments is up 80%, and onsemi has climbed 130%, some investors may prefer to wait for a broader market pullback before initiating a position. Cautious investors might consider adding both Texas Instruments and onsemi to a watchlist to monitor for attractive entry points, as the 800V supercycle appears to be in its early innings.