Analog Devices Inc. (ADI) Sustained revenue outperformance relative to peers given idiosyncratic growth drivers, with strong...

Equity Research 19 August 2026 | 1:16PM EDT

Analog Devices Inc. (ADI): Sustained revenue outperformance relative to peers given idiosyncratic growth drivers, with stronger margins - Buy

Key stock takeaways: We expect the stock to move modestly higher following a James Schneider, Ph.D. | solid quarter with guidance that was well above the Street. We think investor Goldman Sachs & Co. LLC expectations were somewhat elevated given solid reports from analog peers, but we Khalil Fenina expect the magnitude of the beat to move the stock higher from here. We believe | management’s outlook for sustained double-digit analog industry revenue growth Goldman Sachs & Co. LLC

was constructive, and we would point out that ADI has meaningfully outperformed Anmol Makkar | peers over the past few years given its idiosyncratic growth drivers across Goldman Sachs & Co. LLC datacenter, ATE, aerospace/defense, and other areas. From a cyclical perspective, we believe ADI and the industry continue to undership end-demand levels, which Luya You | suggests the analog sector is shipping below long-term trendline demand. As such, Goldman Sachs & Co. LLC

we see the broader sector outperforming normal seasonality over the next 4-6 quarters – and see significant upside to Street estimates as this plays out. We reiterate our Buy rating, as we believe ADI is well positioned to continue gaining market share in the long run, given its focus on idiosyncratic drivers of growth in the industrial, datacenter, and defense markets in the medium term. We raise our EPS estimates by 8% on average, and our 12-month price target to $480 from $450.

Read-through to our coverage: We expect a positive initial reaction for the analog group. We would expect the most direct read-across for NXP (Buy) and ON (Neutral) given their automotive exposures.

Quarterly results above the Street: ADI reported revenue of $4.02 bn, above GS at $3.97 bn and the Street at $3.92 bn. Adjusted gross margin of 72.5% was slightly below GS and the Street at 72.7%. Non-GAAP EPS (incl. SBC) of $3.45 was above GS at $3.42 and the Street at $3.34. Automotive revenue of $998 mn was well above GS at $959 mn and the Street at $939 mn, Industrial revenue of $1.97 bn was in line with GS at $1.98 bn and the Street at $1.96 bn, Communications revenue of $655 mn was above GS at $638 mn and the Street at $639 mn, and Consumer revenue came in at $397 mn, above GS at $390 mn and the Street at $385 mn.

n Datacenter and AI - ADI’s growth in Datacenter is being driven by multiple secular AI infrastructure vectors spanning the entire “grid-to-chip” value chain. On the power side, increasing AI cluster power density, the transition to 800V architecture, and growing demand for high-efficiency power conversion, telemetry, and processor-level power delivery are expanding ADI’s content opportunity. In optics, rising network speeds, higher optical lane counts, and emerging technologies such as optical circuit switching (OCS) and co-packaged

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Goldman Sachs Analog Devices Inc. (ADI)

optics (CPO) are driving growth through higher unit volumes, increased BOM content, and improving market share. Beyond the datacenter, accelerating investments in grid modernization, energy storage, and dedicated microgrids to support AI deployments are creating additional demand for ADI’s sensing, monitoring, and battery management solutions. Collectively, these trends are driving a meaningful expansion of ADI’s datacenter and energy SAM. n Long-term double-digit industry revenue growth, driven by Datacenter - Management believes that overall analog industry revenue can sustain double-digit growth for several years, supported by…