Analog Devices
ADI
$373.09
+0.77%
Analog Devices, Inc. (ADI) is a leading semiconductor company specializing in analog, mixed-signal, and digital signal processing chips, with a dominant position in data converter technology that translates real-world signals into digital data. The company serves a diverse customer base across industrial, automotive, communications, and consumer markets, with over half of its revenue derived from industrial and automotive applications. Currently, ADI is at the center of investor attention due to its strategic pivot toward AI-driven power management, highlighted by its recent $1.5 billion acquisition of Empower, and its strong earnings momentum as the analog semiconductor cycle rebounds. The stock has been a standout performer, up over 51% in the past year, as investors bet on sustained growth from AI infrastructure and industrial automation, though recent volatility suggests some profit-taking after a sharp run-up.…
ADI
Analog Devices
$373.09
Related headlines
Investment Opinion: Should I buy ADI Today?
We rate ADI as a Buy, anchored by the Strong Buy consensus and an average target price of $466, implying 24.9% upside. The thesis is that ADI is a high-quality analog leader benefiting from a cyclical recovery and AI-driven power management growth, with accelerating revenue and expanding margins.
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ADI 12-Month Price Forecast
The AI-driven demand for power management is a genuine growth catalyst, and ADI's strong execution is evident in its margin expansion and revenue acceleration. However, the high valuation and cyclical risks warrant a medium confidence. If ADI can demonstrate sustained growth above 30% and successfully integrate Empower, the stock could re-rate higher. Conversely, any signs of deceleration would likely lead to a de-rating. We would upgrade our stance if the stock pulls back to below $350 while fundamentals remain strong, and downgrade if revenue growth falls below 20%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Analog Devices's 12-month outlook, with a consensus price target around $463.22 and implied upside of +24.2% versus the current price.
Average Target
$463.22
0 analysts
Implied Upside
+24.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$365 - $550
Analyst target range
The target price range spans from a low of $365.00 to a high of $550.00, with the low end slightly below the current price, indicating some analysts see limited downside but also potential for a pullback. The high target of $550.00 implies a 47.4% upside, suggesting that some analysts believe ADI can achieve significant multiple expansion and earnings growth as AI power management becomes a major revenue driver. The wide spread of $185 between low and high targets (about 50% of the average target) signals elevated uncertainty about the pace of AI adoption and the sustainability of the current growth cycle. The recent pattern of ratings has been stable, with no downgrades, and the consensus has remained bullish, suggesting that analysts are confident in ADI's trajectory, though the wide range highlights the risk that the stock may be pricing in perfection.
Bulls vs Bears: ADI Investment Factors
ADI presents a compelling bull case driven by accelerating revenue growth, strategic AI positioning, and strong margin expansion, supported by a Strong Buy consensus and a 24.9% upside to the average target. However, the bear case highlights a rich valuation (trailing PE 51x), recent price weakness, and cyclical risks. Currently, the bull case has stronger evidence given the tangible revenue acceleration and analyst confidence, but the key tension is whether the forward PE of 22.8x is justified by sustainable earnings growth or if the market is pricing in perfection. If AI power management revenue materializes as expected, the stock could re-rate higher; if growth decelerates, the valuation could compress significantly.
Bullish
- Revenue growth accelerating sharply: Q2 FY2026 revenue surged 37.25% YoY to $3.62B, up from 30.6% growth in the prior quarter, marking a clear cyclical inflection. Sequential revenue rose from $2.42B in Q1 FY2025 to $3.62B in Q2 FY2026, a 49.6% increase over five quarters, driven by industrial and automotive recovery plus AI power management demand.
- AI power management acquisition: The $1.5B acquisition of Empower positions ADI to address AI energy bottlenecks, a critical growth area as data centers demand efficient power conversion. This strategic move could open a new high-margin revenue stream, with the AI power management market expected to grow rapidly.
- Strong earnings momentum and margin expansion: Gross margin improved to 67.3% in Q2 FY2026, up from 61.0% a year ago, while operating margin expanded to 38.1% from 25.7%. EPS of $2.41 in Q2 FY2026 more than doubled from $1.15 in the year-ago quarter, reflecting strong operating leverage.
- Analyst consensus is Strong Buy: With 30 analysts, the consensus recommendation is 'Strong Buy' (mean score 1.45), and the average target price of $466 implies 24.9% upside from the current price of $373.09. The high target of $550 suggests 47.4% upside, indicating significant optimism.
Bearish
- Elevated valuation with trailing PE of 51x: The trailing PE of 51.01x is well above historical norms, and the PEG ratio of 1.30 suggests the stock is not cheap even after accounting for growth. The forward PE of 22.81x implies the market expects a massive earnings jump, which could disappoint if growth slows.
- Recent price momentum has stalled: After hitting a 52-week high of $445.91 in June 2026, the stock has pulled back 16.3% to $373.09. The 1-month return is -3.53%, and the 3-month return is -6.04%, indicating profit-taking and potential consolidation after a 51% run over the past year.
- Cyclicality of semiconductor industry: ADI's revenue is highly cyclical, as seen in the downturn from fiscal 2024 to early 2025 when revenue declined. The current recovery could be temporary, and a slowdown in industrial or automotive demand could reverse the growth trajectory.
- Wide analyst target range signals uncertainty: The analyst target range spans from $365 to $550, a $185 spread (about 50% of the average target). This wide dispersion indicates significant disagreement about the sustainability of AI-driven growth and the pace of earnings recovery.
ADI Technical Analysis
ADI's price trend over the past year has been decisively bullish, with the stock up 51.08% over the trailing twelve months, significantly outperforming the S&P 500's 20.48% gain. The current price of $373.09 sits at approximately 83.7% of its 52-week range (between $223.47 low and $445.91 high), indicating the stock remains in the upper portion of its trading band, reflecting strong momentum but also potential overextension after a massive rally. The 52-week high of $445.91 was reached in June 2026, and the stock has since pulled back, suggesting a consolidation phase after a parabolic move.
Beta
1.21
1.21x market volatility
Max Drawdown
-20.7%
Largest decline past year
52-Week Range
$223-$446
Price range past year
Annual Return
+51.1%
Cumulative gain past year
| Period | ADI Return | S&P 500 |
|---|---|---|
| 1m | -3.5% | +3.6% |
| 3m | -6.0% | +2.7% |
| 6m | +5.1% | +11.4% |
| 1y | +51.1% | +18.7% |
| ytd | +36.3% | +12.3% |
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ADI Fundamental Analysis
ADI's revenue trajectory has turned sharply upward, with the most recent quarter (Q2 FY2026, ended May 2, 2026) reporting revenue of $3.62 billion, a 37.25% year-over-year increase, accelerating from the prior quarter's 30.6% growth. This marks a clear inflection from the cyclical downturn experienced in fiscal 2024 and early 2025, when revenue declined sequentially. The growth is broad-based, with industrial (the largest segment at $1.41 billion) and automotive ($845 million) leading the charge, while communications and consumer also contributed. The multi-quarter trend shows sequential acceleration, with revenue rising from $2.42 billion in Q1 FY2025 to $3.62 billion in Q2 FY2026, a 49.6% increase over five quarters, signaling a robust cyclical recovery and AI-driven demand.
Quarterly Revenue
$3.6B
2026-05
Revenue YoY Growth
+37.3%
YoY Comparison
Gross Margin
67.3%
Latest Quarter
Free Cash Flow
$4.6B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ADI Overvalued?
Given ADI's positive net income, the PE ratio is the primary valuation metric. The trailing PE stands at 51.01x, while the forward PE is 22.81x, implying the market expects significant earnings growth over the next year. The gap between trailing and forward PE suggests that the market is pricing in a substantial earnings recovery, which is supported by the recent revenue surge and analyst estimates for EPS of $23.90 in the next fiscal year. This forward multiple is more reasonable but still reflects a premium valuation relative to historical norms.
PE
51.0x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 20x~82x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
24.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include a high payout ratio of 84.9%, which limits financial flexibility and could force dividend cuts if earnings decline. The company carries moderate debt (debt-to-equity 0.26), but interest expense of $87.6M in Q2 FY2026 is manageable. However, the reliance on continued revenue growth to justify the forward PE of 22.8x means any shortfall could trigger a de-rating. Cash flow generation is strong (FCF TTM $4.57B), but the recent $1.5B acquisition adds integration risk and potential goodwill impairment if AI power management growth disappoints.