Q3 2025: Digital and Analog Semiconductor Industry Overview
How will emerging trends impact the semiconductor market in 2025? What is the future of analog semiconductor companies?
Artificial intelligence (AI) remains the most exciting technological transformation of this generation—and semiconductor firms are leading the way in driving such innovation. As of September 22, the median semiconductor stock is fairly valued with the median analog stock 11% undervalued. Digital stocks also continue to be undervalued, standing at a 3% discount. Earlier in the year, amidst a rebound from the “tariff tantrum,” these semiconductors experienced a sharp recovery from double digit discounts.
AI is the defining technological driver of this semiconductor era, with demand for AI semiconductors skyrocketing alongside recoveries in industrial and analog markets.
- AI accelerators now represent 20% of the semiconductor market, with Nvidia leading the way.
- Wide adoption of high-bandwidth memory (HBM) is reshaping the memory sector, meeting data center and AI demands head-on.
- Analog and industrial chip markets are recovering from a cyclical downturn, signaling growth opportunities ahead.
- Even with concerns around macroeconomics and tariffs, secular growth trends across automotive and industrial sectors remain strong.
Morningstar’s latest Digital and Analog Semiconductor Industry report highlights the demand for AI and accelerators—a shift particularly led by Nvidia’s data center graphics processing units (GPUs). Explore the AI GPU market, industrial chip demand, top industry picks, and more.
What is the difference between the types of semiconductors?
The types of semiconductors differ in their functions and applications. Digital semiconductors, like CPUs, GPUs, and microcontrollers, act as the "brains" of devices, handling processing tasks. Memory semiconductors, such as NAND and DRAM, focus on storing information. Analog semiconductors process real-world signals, while optoelectronics, discretes, and sensors include components like image sensors, LEDs, and diodes, which handle specific tasks like sensing or emitting light.
Download the report now to learn more on key trends in this evolving industry and access detailed insights into how semiconductors are evolving across AI, memory, and analog chip markets.
