In a world increasingly driven by technology, Analog Devices, Inc. transforms how we interact with the digital landscape through its innovative semiconductor solutions. Renowned for its high-performance integrated circuits and data converters, ADI plays a pivotal role across industries, from automotive to communications. With a steadfast commitment to quality and cutting-edge advancements, the company stands at the forefront of analog and mixed-signal technology. As we delve into the investment potential of ADI, one must consider whether its strong fundamentals continue to support its current market valuation.
Table of contents
Company Description
Analog Devices, Inc. (ADI), founded in 1965 and headquartered in Wilmington, Massachusetts, is a prominent player in the semiconductor industry. The company specializes in designing, manufacturing, and marketing integrated circuits (ICs) and systems that harness analog, mixed-signal, and digital signal processing technologies. ADI’s product portfolio includes data converters, power management ICs, high-performance amplifiers, and microelectromechanical systems (MEMS) solutions, serving diverse markets such as automotive, industrial, and communications. Operating globally across North America, Europe, and Asia, ADI maintains a strong strategic position by driving innovation and enhancing capabilities in data conversion and signal processing, which are critical for modern electronic applications.
Fundamental Analysis
In this section, I will conduct a fundamental analysis of Analog Devices, Inc., focusing on the income statement, financial ratios, and dividend payout policy.
Income Statement
The following table presents the Income Statement for Analog Devices, Inc. (ADI) over the last five fiscal years, highlighting revenue, expenses, and net income figures.
| Income Statement | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | 7.32B | 12.01B | 12.31B | 9.43B | 11.02B |
| Cost of Revenue | 2.46B | 4.21B | 4.43B | 4.05B | 4.99B |
| Operating Expenses | 3.16B | 4.53B | 4.05B | 3.35B | 3.02B |
| Gross Profit | 4.86B | 7.80B | 7.88B | 5.38B | 6.02B |
| EBITDA | 2.59B | 5.60B | 6.17B | 4.20B | 5.03B |
| EBIT | 1.51B | 3.30B | 3.87B | 2.10B | 3.03B |
| Interest Expense | 0.18B | 0.20B | 0.26B | 0.32B | 0.32B |
| Net Income | 1.39B | 2.75B | 3.31B | 1.64B | 2.27B |
| EPS | 3.50 | 5.29 | 6.60 | 3.30 | 4.59 |
| Filing Date | 2021-12-03 | 2022-11-22 | 2023-11-21 | 2024-11-26 | 2025-11-25 |
Interpretation of Income Statement
Over the five-year period, Analog Devices, Inc. has demonstrated fluctuating revenue, peaking in 2023 at 12.31B before declining in 2024 to 9.43B, and then recovering to 11.02B in 2025. Net income trends followed a similar pattern, with a notable drop in 2024 before rebounding in 2025. Gross margins remained relatively stable, though there was a slight improvement in 2025, indicating effective cost management. The increase in EBITDA and EBIT in 2025 demonstrates a rebound in operational efficiency, suggesting that ADI is strategically positioned for future growth despite past volatility.
Financial Ratios
The following table summarizes the financial ratios for Analog Devices, Inc. (ADI) across the most recent fiscal years.
| Ratios | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | 18.999% | 22.878% | 26.936% | 17.346% | 20.575% |
| ROE | 3.659% | 7.537% | 9.320% | 4.649% | 6.705% |
| ROIC | 3.533% | 6.070% | 7.520% | 4.043% | 5.554% |
| P/E | 49.593 | 27.369 | 24.330 | 68.414 | 51.051 |
| P/B | 1.815 | 2.063 | 2.267 | 3.180 | 3.423 |
| Current Ratio | 1.941 | 2.022 | 1.370 | 1.835 | 2.190 |
| Quick Ratio | 1.508 | 1.448 | 0.857 | 1.351 | 1.680 |
| D/E | 0.180 | 0.181 | 0.197 | 0.217 | 0.254 |
| Debt-to-Assets | 13.039% | 13.125% | 14.374% | 15.862% | 17.902% |
| Interest Coverage | 9.156 | 16.360 | 14.446 | 6.309 | 9.450 |
| Asset Turnover | 0.140 | 0.239 | 0.252 | 0.195 | 0.230 |
| Fixed Asset Turnover | 3.698 | 5.003 | 3.823 | – | – |
| Dividend Yield | 1.608% | 2.053% | 2.082% | 1.605% | 1.663% |
Interpretation of Financial Ratios
Analyzing Analog Devices, Inc. (ADI) for FY 2025, the liquidity ratios indicate a strong position with a current ratio of 2.19 and a quick ratio of 1.68, suggesting sufficient short-term assets to cover liabilities. The solvency ratio stands at 0.30, which is moderate but may raise concerns about long-term stability given the high debt levels (debt-to-assets ratio of 0.18). Profitability is robust, with a net profit margin of 20.58%, indicating effective cost management. However, the price-to-earnings ratio of 51.05 implies that the stock is relatively expensive compared to earnings, which might pose risks for value investors. Overall, while ADI displays solid liquidity and profitability, caution should be exercised regarding its valuation and solvency.
Evolution of Financial Ratios
Over the past five years, ADI’s financial ratios have shown a mixed trend. The current ratio has improved from 1.94 in 2021 to 2.19 in 2025, reflecting enhanced liquidity. However, the net profit margin has fluctuated, indicating variability in profitability. The rising price-to-earnings ratio suggests increasing market expectations but could also point to potential overvaluation.
Distribution Policy
Analog Devices, Inc. (ADI) maintains a dividend payout ratio of approximately 85%, with a dividend per share of $3.89 and an annual yield of 1.66%. While the company also engages in share buybacks, I assess the sustainability of these distributions, especially under potential market pressures. Current free cash flow coverage is robust, but investors should remain cautious of the risks associated with high payout ratios and the implications of excessive repurchases on long-term value creation. Overall, ADI’s distribution strategy appears aligned with sustainable shareholder value, but vigilance is necessary.
Sector Analysis
Analog Devices, Inc. (ADI) operates in the semiconductor industry, specializing in integrated circuits and mixed-signal processing technologies, facing competition from notable players while leveraging strengths in innovation and diverse applications.
Strategic Positioning
Analog Devices, Inc. (ADI) holds a significant position in the semiconductor industry, particularly with its data converter products, which dominate a substantial market share. As of 2025, ADI faces competitive pressure from both established players and emerging tech firms, requiring continuous innovation. The company’s commitment to leveraging advanced analog and mixed-signal technologies positions it well against technological disruptions. With a focus on high-performance solutions for diverse markets, including automotive and communications, ADI remains resilient while navigating the complexities of a rapidly evolving landscape.
Revenue by Segment
The chart below illustrates the revenue breakdown by segment for Analog Devices, Inc. (ADI) for the fiscal year 2024, showcasing the performance across various business divisions.
In FY 2024, the Industrial segment remains the largest contributor with $4.31B, although it has experienced a decline from $6.56B in FY 2023. The Automotive segment generated $2.83B, showing slight contraction from $2.92B the previous year. Communications and Consumer segments reported revenues of $1.08B and $1.20B, respectively, with Communications experiencing a notable drop from $1.62B in FY 2023. Overall, while the revenue from Industrial and Automotive segments remains strong, the declines in Communications and Industrial raise concerns about potential market saturation and competitive pressures moving forward.
Key Products
Analog Devices, Inc. (ADI) offers a diverse range of products that are pivotal in the semiconductor industry. Below is a summary of some of their key products:
| Product | Description |
|---|---|
| Data Converters | Products that convert real-world analog signals to digital data and vice versa. |
| Power Management ICs | Integrated circuits designed for power conversion, monitoring, and energy management across various applications. |
| High-Performance Amplifiers | Amplifiers that condition analog signals for various applications, ensuring high fidelity and performance. |
| RF and Microwave ICs | Integrated circuits supporting cellular infrastructure and communication systems. |
| Microelectromechanical Systems (MEMS) | Technology solutions that include accelerometers and gyroscopes for motion sensing applications. |
| Digital Signal Processors | Products engineered for high-speed numeric calculations, essential in complex signal processing tasks. |
These offerings place Analog Devices at the forefront of technology in various sectors, including automotive, industrial, and communications.
Main Competitors
The competitive landscape in the semiconductor industry is dynamic, with several key players vying for market share alongside Analog Devices, Inc.
| Company | Market Cap |
|---|---|
| Texas Instruments Incorporated | 166B |
| KLA Corporation | 160B |
| Analog Devices, Inc. | 139B |
| Cadence Design Systems, Inc. | 92B |
| Synopsys, Inc. | 87B |
| Marvell Technology, Inc. | 85B |
| NXP Semiconductors N.V. | 57B |
| MicroStrategy Incorporated | 51B |
| Monolithic Power Systems, Inc. | 46B |
| STMicroelectronics N.V. | 23B |
The main competitors in the semiconductor sector include Texas Instruments and KLA Corporation, among others, and they primarily operate in a global market.
Competitive Advantages
Analog Devices, Inc. (ADI) boasts several competitive advantages, primarily stemming from its robust portfolio of innovative products in the semiconductor industry. The company’s expertise in analog, mixed-signal, and digital signal processing technologies positions it well to capitalize on emerging markets such as automotive electrification and industrial automation. With a strong focus on high-performance amplifiers and power management solutions, ADI is set to launch new products that cater to the growing demand for energy-efficient technologies. Additionally, expanding its presence in Asia and diversifying into new sectors like healthcare will provide further growth opportunities, enhancing its market position in the years to come.
SWOT Analysis
The SWOT analysis provides a structured approach to evaluate Analog Devices, Inc. (ADI) and its strategic position in the semiconductor industry.
Strengths
- Strong market presence
- Diverse product portfolio
- Established brand reputation
Weaknesses
- High dependency on cyclical markets
- Intense competition
- Limited consumer market penetration
Opportunities
- Growth in automotive electronics
- Expansion into emerging markets
- Increased demand for IoT solutions
Threats
- Supply chain disruptions
- Rapid technological changes
- Economic downturns
The overall SWOT assessment indicates that while ADI has robust strengths and opportunities, it must remain vigilant against industry threats and address its weaknesses to sustain growth and competitiveness. Strategic focus on innovation and market expansion will be vital for navigating potential challenges.
Stock Analysis
Over the past year, Analog Devices, Inc. (ADI) has demonstrated significant price movements, reflecting a bullish trend with notable acceleration in its stock price.
Trend Analysis
Analyzing the stock’s performance over the last two years, we observe a remarkable price change of +49.34%. This substantial increase confirms a bullish trend for ADI. The stock has experienced notable highs at $281.29 and lows at $164.6, indicating a robust performance within this timeframe. Additionally, the acceleration status indicates that the upward momentum is gaining strength, supported by a standard deviation of 19.99, suggesting some level of volatility in the price movements.
Volume Analysis
In the last three months, ADI’s trading volumes have shown an increasing trend. The total volume recorded is approximately 2B, with buyer-driven activity slightly dominating at 50.27%. This indicates a balanced investor sentiment, as the market appears to be leaning slightly towards buyers but remains relatively neutral overall. The recent period also reflects a similar trend, with buyer volume slightly exceeding seller volume, suggesting a cautious but positive market participation.
Analyst Opinions
Recent analyst recommendations for Analog Devices, Inc. (ADI) indicate a cautious optimism, with a consensus rating of “Buy.” Analysts have highlighted the company’s strong discounted cash flow and return on assets, which score 4 and 4, respectively. Notably, an analyst with a “B+” rating emphasized ADI’s solid financial health despite some concerns over its debt-to-equity ratio, which scored a 2. Overall, the majority view supports investment in ADI for 2025, given its potential for growth and profitability.
Stock Grades
Analog Devices, Inc. (ADI) has received consistent grades from several reputable grading companies. Below is a summary of the latest stock ratings:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Morgan Stanley | maintain | Overweight | 2025-11-26 |
| JP Morgan | maintain | Overweight | 2025-11-26 |
| Evercore ISI Group | maintain | Outperform | 2025-11-26 |
| Benchmark | maintain | Buy | 2025-11-26 |
| B of A Securities | maintain | Buy | 2025-11-26 |
| Baird | maintain | Outperform | 2025-11-26 |
| Wells Fargo | maintain | Equal Weight | 2025-11-26 |
| Truist Securities | maintain | Hold | 2025-11-26 |
| Cantor Fitzgerald | maintain | Overweight | 2025-09-30 |
| Benchmark | maintain | Buy | 2025-08-21 |
Overall, the trend in grades for ADI indicates a strong consensus among analysts, with multiple firms maintaining their positive outlooks, particularly with several “Overweight” and “Buy” ratings. This suggests a robust confidence in the company’s performance moving forward.
Target Prices
The consensus target price for Analog Devices, Inc. (ADI) reflects positive analyst sentiment.
| Target High | Target Low | Consensus |
|---|---|---|
| 300 | 258 | 283.58 |
Analysts predict a favorable outlook for ADI, with a consensus target of 283.58, suggesting potential for growth within the specified range.
Consumer Opinions
Consumer sentiment about Analog Devices, Inc. (ADI) reflects a mix of appreciation for its innovative technologies and concerns regarding pricing strategies.
| Positive Reviews | Negative Reviews |
|---|---|
| “Exceptional product quality and reliability.” | “Pricing is higher compared to competitors.” |
| “Great customer support and service.” | “Delivery times can be inconsistent.” |
| “Innovative solutions that meet our needs.” | “Limited product range in some areas.” |
Overall, consumer feedback indicates strong satisfaction with product quality and customer support, while concerns often arise around pricing and delivery issues.
Risk Analysis
Understanding potential risks is essential for making informed investment decisions. Below is a summary of key risks associated with Analog Devices, Inc. (ADI).
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Risk | Volatility in semiconductor demand due to economic cycles. | High | High |
| Regulatory Risk | Changes in trade policies affecting import/export tariffs. | Medium | High |
| Technological Risk | Rapid advancements in technology may outpace ADI’s innovation. | High | Medium |
| Supply Chain Risk | Disruptions in the supply chain could lead to production delays. | Medium | High |
| Competitive Risk | Increased competition from emerging tech companies. | High | Medium |
Currently, the semiconductor industry faces significant volatility, driven by fluctuating demand and evolving technologies. These factors can greatly impact ADI’s performance and should be closely monitored.
Should You Buy Analog Devices, Inc.?
Analog Devices, Inc. (ADI) demonstrates a strong profitability profile with a net profit margin of 20.58%, reflecting robust operational efficiency. The company appears to create value as its return on invested capital (ROIC) of 5.55% exceeds the weighted average cost of capital (WACC) of 8.29%, indicating effective capital utilization. ADI maintains a manageable debt level, with a debt-to-equity ratio of 0.254, suggesting financial stability. Over the years, the company’s fundamentals have evolved positively, culminating in a current rating of B+, which highlights its solid performance metrics and relative strength in the market.
Favorable signals
I have identified several favorable signals in the data for Analog Devices, Inc. The company showcases a robust revenue growth rate of 16.89% and a high gross margin of 54.66%. Additionally, the net margin stands at a positive 20.58%, with net margin growth of 18.61%. The operating expenses compared to revenue growth also reflect a favorable status at 16.89%. Furthermore, the company exhibits a strong interest coverage ratio of 9.54, alongside a current ratio of 2.19 and a quick ratio of 1.68, indicating good liquidity.
Unfavorable signals
Despite the favorable elements, there are some unfavorable signals to note. The return on equity (ROE) is at 6.7%, which is considered unfavorable. Additionally, the price-to-earnings (P/E) ratio is high at 51.05, and the price-to-book (P/B) ratio is also elevated at 3.42. Furthermore, the asset turnover ratio is low at 0.23, and the fixed asset turnover is at 0, both of which indicate inefficiencies in asset utilization.
Conclusion
Considering the favorable income statement evaluation alongside the favorable ratios evaluation, the outlook for long-term investors could appear positive. However, given the unfavorable trends in ROE, P/E, and asset turnover, it might be prudent to monitor the situation closely for further developments.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Investigating Analog Devices’s Standing In Semiconductors & Semiconductor Equipment Industry Compared To Competitors – Analog Devices (NASDAQ:ADI) – Benzinga (Dec 05, 2025)
- See How Analog Devices Attracts Huge Institutional Inflows – FXEmpire (Dec 05, 2025)
- Analog Devices’ (NASDAQ:ADI) five-year earnings growth trails the 16% YoY shareholder returns – Yahoo Finance (Dec 03, 2025)
- Are Computer and Technology Stocks Lagging Analog Devices (ADI) This Year? – Nasdaq (Dec 03, 2025)
- CW Advisors LLC Acquires 15,841 Shares of Analog Devices, Inc. $ADI – MarketBeat (Dec 03, 2025)
For more information about Analog Devices, Inc., please visit the official website: analog.com
