10 Best AI Chip Stocks to Buy According to Hedge Funds

8. Analog Devices Inc. (NASDAQ:ADI)

Analog Devices Inc. (NASDAQ:ADI) is one of the 10 best AI chip stocks to buy according to hedge funds.

On March 30, Arete upgraded Analog Devices Inc. (NASDAQ:ADI) rating from Neutral to Buy. The firm forecasted a target price of $389, which results in a potential upside of more than 22% at the current level.

According to the firm, an incremental growth of 71% can be driven for this business cycle through the company’s “structural” businesses. Sales for fiscal year 2028 are projected to be $19.3 billion, topping the consensus of $16.7 billion.

On March 3, Analog Devices Inc. (NASDAQ:ADI) Executive Vice President and CFO Richard Puccio discussed the company’s growth trajectory at Morgan Stanley’s Technology, Media & Telecom Conference. Puccio noted nine consecutive quarters with strong performance beyond seasonality, which was driven by the rapid growth of the automated testing equipment segment at over 40% yearly growth because of the high-performance compute trend.

He noted that the data center segment reported 50% yearly growth for three consecutive quarters, whereas the automotive segment reported consecutive records. According to Puccio, more than 90% of the expected component movement from the cyclical peak has taken place, and the channel inventory issue has been sorted out. He thinks that the AI capex cycle will remain an outstanding tailwind in the medium term, especially in the aerospace and defense segment.

Analog Devices Inc. (NASDAQ:ADI) develops integrated circuits, software, and subsystems. A large chunk of its business comes from power management technology and building data converters. It provides services to customers in a number of sectors, such as healthcare and defense. Along with specialized microwave hardware and micro-electro-mechanical systems, it also provides digital signal processors.