Manufacturer of analog chips Analog Devices (NASDAQ: ADI) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 30.4% year on year to $3.16 billion. On top of that, next quarter’s revenue guidance ($3.5 billion at the midpoint) was surprisingly good and 8.1% above what analysts were expecting. Its non-GAAP profit of $2.46 per share was 6.6% above analysts’ consensus estimates.
Is now the time to buy Analog Devices? Find out by accessing our full research report, it’s free.
Analog Devices (ADI) Q4 CY2025 Highlights:
- Revenue: $3.16 billion vs analyst estimates of $3.11 billion (30.4% year-on-year growth, 1.5% beat)
- Adjusted EPS: $2.46 vs analyst estimates of $2.31 (6.6% beat)
- Revenue Guidance for Q1 CY2026 is $3.5 billion at the midpoint, above analyst estimates of $3.24 billion
- Adjusted EPS guidance for Q1 CY2026 is $2.88 at the midpoint, above analyst estimates of $2.46
- Operating Margin: 31.5%, up from 20.3% in the same quarter last year
- Free Cash Flow Margin: 39.8%, similar to the same quarter last year
- Inventory Days Outstanding: 144, up from 133 in the previous quarter
- Market Capitalization: $164.9 billion
"ADI's robust first quarter built upon the strong position and momentum with which we entered the year," said Vincent Roche, CEO and Chair.
Company Overview
Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ: ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Analog Devices grew its sales at an impressive 14.9% compounded annual growth rate. Its growth beat the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Analog Devices’s recent performance shows its demand has slowed significantly as its revenue was flat over the last two years. 
This quarter, Analog Devices reported wonderful year-on-year revenue growth of 30.4%, and its $3.16 billion of revenue exceeded Wall Street’s estimates by 1.5%. Beyond the beat, this marks 4 straight quarters of growth, implying that Analog Devices is in the middle of its cycle - a typical upcycle generally lasts 8-10 quarters. Company management is currently guiding for a 32.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 14.3% over the next 12 months. While this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.
The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Analog Devices’s DIO came in at 144, which is 19 days above its five-year average, suggesting that the company’s inventory has grown to higher levels than we’ve seen in the past.
Key Takeaways from Analog Devices’s Q4 Results
We were impressed by Analog Devices’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its inventory levels materially increased. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 9.3% to $368.99 immediately following the results.
Analog Devices had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
