UBS's Global I/O Semiconductors team has named its preferred analog semiconductor stocks as the industry shows signs of strengthening heading into 2026, driven by improving dynamics in automotive and industrial end markets even as China presents new challenges.
The team projects that analog revenue growth will persist through 2026. Fourth-quarter 2025 revenue is forecast to be up 11 percent year-over-year, and consensus estimates cited by UBS indicate first-quarter 2026 growth of 18 percent year-over-year and roughly 16 percent for full-year 2026 - an upward revision from prior expectations of 12 percent.
UBS noted that several analog players, including Texas Instruments, Infineon, and NXP, raised prices during the quarter in response to inflationary pressures, a move the bank says could add upside to industry revenue and margins. On valuation, the analog group is trading at about 21.6 times forward 12-month earnings, compared with a 10-year average of 19 times.
Despite the constructive outlook, UBS remains cautious on parts of the Chinese market. The bank points to January-February retail sales data that showed a 19 percent year-to-date decline, a metric it views as an emerging headwind.
UBS's most preferred analog semiconductor names
- STMicroelectronics - UBS assigns a Buy rating and lists STMicroelectronics among its top analog picks. UBS highlights the firm's exposure to artificial intelligence applications, noting that management raised guidance for AI-related end markets during the quarter. In a recent development, STMicroelectronics and Leopard Imaging announced a multimodal vision module for robotics that integrates with NVIDIA's Jetson platform.
- Renesas Electronics - Also rated Buy, Renesas is singled out for its expected benefit from an automotive semiconductor recovery. UBS projects the automotive segment to grow 8 percent in the first quarter of 2026, which would mark the first quarter of year-over-year growth in more than two years. Renesas reported strong fourth-quarter results, with sales of ¥350.9 billion that exceeded market expectations and a gross profit margin of 59.3 percent, above its guidance.
- Texas Instruments - UBS rates Texas Instruments as a Buy and includes it among its most preferred analog names. The bank noted that Texas Instruments was among the companies that raised pricing during the quarter to offset inflation costs, a factor that could counterbalance current expectations for low-single-digit percentage price declines in fiscal years 2026 and 2027. Texas Instruments also announced a collaboration with Nvidia to develop technology for humanoid robots and has put forward a bid to acquire Silicon Laboratories. Following the acquisition announcement, Moody's revised its outlook on Texas Instruments to negative from stable.
Market and valuation context
UBS's analysis places the analog semiconductors sector at a premium relative to its 10-year average forward price-to-earnings multiple, suggesting investors are paying up for growth and defensive end-market exposure. The bank's positive stance is tempered by the uneven macro picture, particularly the deterioration in early-year retail sales figures in China.
Outlook
UBS expects continued revenue growth in the analog space through 2026 and identifies STMicroelectronics, Renesas Electronics, and Texas Instruments as favored exposures to this trend, while drawing attention to valuation and China-related demand risks.