35 Chip Stocks Powering AI Boom

13. Analog Devices, Inc. (NASDAQ:ADI)

Number of Hedge Fund Holders: 64 

Analog Devices, Inc. (NASDAQ:ADI) designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems products. As other chip makers struggle, ADI has shown impressive inventory management. The second quarter earnings of the firm highlighted this fact, as across all other peers in the analog space, ADI saw the largest year-over-year decline in inventory in the latest quarter. This was the fourth consecutive quarter that ADI reduced inventory on the balance sheet. These numbers indicate that the company has a lot more flexibility to ramp up production to capture new incremental demand in AI without the need to pressure gross margins.

Vincent Roche, the CEO of Analog Devices, Inc. (NASDAQ:ADI), said during the second quarter earnings call that data center customers were investing in new vertical power architectures to meet the intensified energy and processing demands of AI compute systems. Per Roche, the solutions offered by his firm in this regard reduced power losses by up to 35% compared to existing architectures. This product is now gaining traction with hyperscalers.