Analog Devices
ADI · NASDAQSemiconductors · Analog / Mixed-Signal
Since the Report − 3.5%
Close on Report DayAug 19
$373.26▼ 0.9%Report-Day Move
- Market Cap(Today)
- ≈ $175 B
- 1Y Return(At Report)
- + 68%
- P/E($11.26 · Trailing 12M)
- 32.0
- Net Margin(Trailing 12M)
- 29.8%
Analog Devices posted a record quarter: revenue rose 40% year over year to $4.02 billion as industrial demand and AI data-center needs drove growth, while adjusted EPS of $3.45 beat expectations. Even so, the stock slipped modestly during the session (−0.9% close to close) because the strong result was largely priced in. What matters next is whether the robust Q4 outlook of $4.3 billion confirms this momentum is durable.
Revenue (Q3)
$4.02B
▲ 40% YoY
Adjusted EPS
$3.45
▲ 68% YoY
Industrial Segment
$1.97B
▲ 53% YoY
Communications Segment
$654M
▲ 84% YoY
Adjusted Gross Margin
72.5%
Last Year 69.2%
Stock Reaction
▼ 0.9%
Close to Close
Quarterly Revenue ($ Billion)
2.87
3.08
3.16
3.62
4.02
4.2–4.4
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
- Q4 26E
- Annual Revenue Growth
- ▲ 40%
- Industrial Share
- 49%Largest Segment
- Automotive Growth
- ▲ 16%Relatively Slow
Q4 FY2026 Company Guidance
- Revenue4.2 – 4.4 billion
Midpoint $4.3BAbove Expectations ▲
- Adjusted EPS3.71 – 4.01 $
Midpoint $3.86Strong Increase ▲
- Adjusted Operating Margin51% – 53%
Last Quarter 50.0%Expanding ▲
The blue band is the company's low–high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. Axis is ±4.5% around the midpoint.
- Free Cash Flow (TTM)
- $4.94B36% of Revenue
- Quarterly Dividend
- $1.10Per Share
- Capital Returned
- $1.69BPaid This Quarter
“ADI delivered a strong third quarter, exceeding the midpoint of our revenue, margin, and earnings outlook as we capitalized on broad-based demand.”
- Broad-based demand
- Record quarter
- Above-consensus guidance
Summary
Analog Devices' third-quarter revenue climbed 40% year over year to $4.02 billion, the highest quarterly revenue in the company's history. Growth was led by the industrial segment (about half of total revenue at $1.97 billion, up 53%) and the communications segment ($654 million, up 84%) on rising power and connectivity demand from AI data centers. Automotive grew 16% and consumer 6%, meaning all four end markets moved higher at once. Adjusted EPS of $3.45 (up 68%) topped market expectations, while GAAP EPS nearly tripled to $2.74. Adjusted gross margin widened to 72.5% and adjusted operating margin reached 50%.
Despite the strong figures, the stock fell roughly 0.9% close to close in the session the results were reported. The main reason was already-high expectations: the shares had gained about 68% over the past 12 months, pricing in much of the good news in advance. With the analog semiconductor cycle recovery widely discussed already, even a 'record quarter' struggled to surprise. Investors also questioned how long the double-digit valuation multiple can hold and whether some demand reflects early ordering, or inventory build. The near-term reaction does not break the story; it simply shows the good news was priced in.
The overall picture is strong. The company guided Q4 to $4.3 billion (±$100 million) in revenue and $3.86 in adjusted EPS, both above market expectations and pointing to continued momentum. Generating $4.94 billion in free cash flow over the past 12 months (36% of revenue), ADI returned $1.69 billion to shareholders through dividends and buybacks in this quarter alone. Our score, which evaluates the quarter itself, is high thanks to broad-based growth across every end market, margin expansion and above-consensus guidance. The one caveat is that the stock had largely priced the result in. This is not a stock recommendation but a report card on the quarter: operationally, ADI clearly beat expectations.
Full Review
ClaudeIndustrial and data center drive growth.
The industrial segment, about half of total revenue, reached $1.97 billion and grew 53% year over year, the largest contributor of the quarter. It was followed by the communications segment ($654 million), up 84% on rising power and high-speed connectivity needs from AI data centers. Automotive grew 16% to $998 million and consumer grew 6% to $397 million. As a result, all four end markets turned higher year over year at the same time, signaling a broad-based recovery that does not depend on a single customer or theme. Management noted on the call that the demand is also visible in order bookings. In the analog semiconductor cycle, this kind of simultaneous growth is often read as a sign that the inventory-digestion phase has ended.
Margins sit near a peak.
Adjusted gross margin widened to 72.5% from 69.2% a year earlier, and adjusted operating margin reached 50%. This is the classic result of operating leverage, as fixed costs spread over a larger revenue base while revenue grows. On a GAAP basis, gross margin was 67.3% and operating margin 40.1%. The company's Q4 guidance takes adjusted operating margin to roughly 52%, implying margin expansion continues. High margins are also the main reason for ADI's strong cash generation. However, as margins approach historical highs, the additional contribution from here is naturally limited; future profit growth will depend more on revenue growth.
Guidance signals durable momentum.
ADI guided Q4 to $4.2–4.4 billion (midpoint $4.3 billion) in revenue and $3.71–4.01 (midpoint $3.86) in adjusted EPS. Both figures came in above market expectations and prompted comments during the session that 'the outlook was as strong as the results.' The midpoint revenue implies roughly 7% sequential growth over the third quarter, meaning the company keeps growing from peak to peak. The guided adjusted EPS is about 60% higher than a year ago. This outlook supports the thesis that the recovery is an ongoing trend rather than a one-quarter jump.
Valuation had priced the beat in.
The stock gained about 68% over the past 12 months and entered the record quarter already at a high multiple. That is why, despite strong results and above-consensus guidance, it slipped roughly 0.9% close to close in the session, a 'sell-the-news' type reaction. Analysts' average 12-month target is around $459, implying roughly 23% upside from the current price, though the target range is wide at $365 to $550. Because the valuation sits at a double-digit revenue multiple, it is worth remembering the stock is exposed to a pullback if growth eventually slows. Even so, this concerns only where the price started, not the operational quality of the quarter.
Strengths
5- All four end markets (industrial, automotive, communications, consumer) grew year over year at the same time.
- Communications revenue jumped 84% year over year on AI data-center demand.
- Adjusted gross margin of 72.5% and operating margin of 50% rank among the sector's best.
- $4.94 billion in free cash flow over the past 12 months; $1.69 billion returned to shareholders this quarter.
- Q4 guidance came in above market expectations on both revenue and earnings.
Risks
5- The stock is up ~68% over the past 12 months; much of the good result appears already priced in.
- In the analog cycle, part of the demand may stem from early ordering (inventory build).
- Automotive (16%) and consumer (6%) growth lagged the other segments.
- The double-digit revenue multiple is exposed to a pullback if growth slows.
- Tariffs and supply-chain uncertainty pose sector-wide risks.
What to Watch
3- Q4 FY2026 results will be reported ~Nov 2026 along with full-year figures.
- Next payment of the $1.10 per-share quarterly dividend.
- AI data-center investment pace and customer order backlog to watch.
Upcoming Earnings
To Understand This