Analog Devices, Inc.

Third quarter revenue was a record $4.02 billion, up 11% sequentially and 40% year over year. Gross margin was 72.5%, down 50 basis points sequentially and up 33 basis points year over year. Operating margin was 50%, up 100 basis points sequentially and 780 basis points year over year, and EPS was a record $3.45, up 12% sequentially and 68% year over year. By segment, industrial was 49% of revenue and up 53% year over year, automotive was 25% and up 16%, communications was 16% and up 84%, and consumer was 10% and up 6%. For Q4, management expects revenue of $4.3 billion plus or minus $100 million, operating margin of 52% plus or minus 100 basis points, and EPS of $3.86 plus or minus $0.15.

Vincent Roche said the quarter showed ADI’s growth broadening across end markets, with AI and defense, plus secular content growth, driving a stronger multi-year setup. He emphasized a “grid-to-chip” strategy in AI, arguing power availability is now the key bottleneck and that ADI’s portfolio spans the full electricity chain from grid monitoring and storage to rack and processor power delivery. His tone was highly confident and strategic, repeatedly pointing to expanding design wins, higher content, and a larger long-term SAM in data center and energy.

Richard Puccio highlighted broad-based financial strength: revenue of $4.02 billion, gross margin of 72.5%, operating margin of 50%, and EPS of $3.45. He said cash and short-term investments fell to $2.3 billion after the $1.5 billion all-cash Empower Semiconductor acquisition, and net leverage is 0.9. Inventory increased by $83 million sequentially, but days declined to 156 and channel weeks fell below the 6- to 7-week target; trailing 12-month free cash flow was a record $4.9 billion, or 36% of revenue, and CapEx was $600 million. For Q4, he guided to revenue of $4.3 billion plus or minus $100 million, operating margin of 52% plus or minus 100 basis points, non-operating expense of about $80 million, and a tax rate of 12% to 14%.

Analysts focused on whether Q4’s gross margin step-up was driven by mix, utilization, or price, and Puccio said the expected increase to about 74% reflects favorable mix, higher fixed-cost absorption, and price actions, though some cost inflation remains. On fiscal 2027, Roche said ADI is benefiting from defense and AI supercycles, stronger pricing, and the Maxon synergies, which he expects to exceed $1 billion in 2027, while acknowledging macro, geopolitical, and AI capex risks. On longer-term data center growth, management said the segment should have an extended runway through at least 2030, with energy also expected to roughly double by decade-end. On supply, Puccio said ADI is adding inventory, internal capacity, and external wafers, while Roche said the company is scenario-planning for sustained growth and continuing to extend its hybrid manufacturing model.