Analog Devices, Inc.

Analog Devices reported second-quarter revenue of a record $3.62 billion, above the high end of guidance, up 15% sequentially and 37% year-over-year. Adjusted EPS was a record $3.09, up 26% sequentially and 67% year-over-year; gross margin was 73%, up 180 basis points sequentially and 360 basis points year-over-year, and operating margin was 49%. For Q3, management guided revenue to $3.9 billion plus or minus $100 million, operating margin to 49% plus or minus 100 bps, tax rate to 12% to 14%, and adjusted EPS to $3.30 plus or minus $0.15.

Vincent Roche emphasized that ADI is seeing record demand despite geopolitical and macro uncertainty, and said the company’s hybrid manufacturing model and expanded supply-chain optionality are letting it capture upside. He highlighted strong growth in data center, ATE, aerospace and defense, automation, energy, health care and broad-market industrial, and said these are supported by secular trends like AI, electrification and robotics. His tone was highly confident, repeatedly pointing to long product cycles, strong design-ins and what he described as a broad-based industrial upcycle.

Richard Puccio said Q2 revenue was $3.62 billion, gross margin was 73%, operating margin was 49%, nonoperating expenses were $57 million, and the tax rate was 11.8%. He noted cash and short-term investments of $3.4 billion, net leverage of 0.8, inventory up $81 million sequentially, days of inventory at 168, operating cash flow of $5.1 billion over the trailing 12 months, CapEx of $0.5 billion, and free cash flow of $4.6 billion or 36% of revenue. He said ADI returned $5 billion to shareholders over the trailing 12 months and still targets 100% free cash flow return over the long term, with fiscal '26 CapEx expected to stay within the 4% to 6% of revenue model.

Analysts pressed on customer supply concerns, pricing, data center growth, gross margin sustainability, auto demand, and the Empower acquisition. Management said customers are generally calm, lead times are in good shape, and ADI has more internal and external capacity than before COVID, while pricing actions are mainly offsetting inflation and added a couple of points to fiscal '26 growth. On data center, ADI said both optical and power are growing at similar rates and that the business should continue to be the fastest sequential grower next quarter; on auto, management said strength came from content gains, China pickup and still-lean customer inventories rather than restocking.