Analog Devices Revenue Surges 40%, CEO Sees Momentum Extending into 2027

Analog Devices Inc. shares rose in premarket trading Wednesday after the semiconductor company posted third-quarter results that beat Wall Street expectations and issued stronger-than-expected fourth-quarter guidance.

Analog Devices Third-Quarter Results Beat Expectations

Analog Devices reported adjusted earnings per share of $3.45, surpassing the analyst estimate of $3.33. Revenue grew 40% year-over-year to $4.02 billion, exceeding the consensus expectation of $3.92 billion.

Adjusted earnings per share rose 68% compared to a year ago, reflecting stronger demand across the company's business segments.

Gross Margin Expansion, Higher Cash Flow

Adjusted gross margin expanded 330 basis points year-over-year to 72.5%, and adjusted operating margin increased 780 basis points to 50%.

Analog Devices generated $1.6 billion in operating cash flow during the quarter, up from $1.17 billion a year earlier. Free cash flow totaled $1.46 billion.

CEO Highlights Broad-Based Demand, Sees AI Opportunities

CEO and Chairman Vincent Roche said demand strengthened broadly in the third quarter, helping the company exceed the midpoint of its revenue, gross margin, and earnings per share guidance.

Roche said continued innovation investment, close customer relationships, and manufacturing flexibility position the company to capture opportunities related to artificial intelligence.

CFO Expects Momentum to Extend into Fiscal 2027

CFO Richard Puccio said demand improved across the company's product portfolio and geographic markets, supporting what he called record fourth-quarter guidance.

Puccio expects disciplined execution and targeted growth investments to help the company finish the fiscal year strongly and carry momentum into fiscal 2027.

Fourth-Quarter Guidance Beats Expectations

Analog Devices forecasts fourth-quarter adjusted earnings per share of $3.71 to $4.01, exceeding the midpoint of the analyst consensus estimate of $3.54.

The company expects revenue of $4.2 billion to $4.4 billion, surpassing the midpoint of the $4.07 billion consensus expectation.

Analog Devices anticipates GAAP earnings per share of $2.99 to $3.29, compared to the Wall Street estimate of $2.72.

As of August 1, the company held $2.32 billion in cash and cash equivalents.

ADI stock performance: Analog Devices shares rose 1.32% to $381.60 in premarket trading Wednesday.