Analog Devices, Inc. transforms the way we interact with technology, translating complex analog signals into meaningful digital data that powers our modern world. As a leading player in the semiconductor industry, ADI is renowned for its innovation in integrated circuits and signal processing solutions, catering to diverse sectors from automotive to communications. With a commitment to quality and performance, the company consistently shapes the future of electronic systems. As I analyze ADI’s current market position, I question whether its robust fundamentals still justify its valuation and growth prospects.
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) that utilize analog, mixed-signal, and digital signal processing technologies. ADI’s diverse product portfolio includes data converters, power management solutions, high-performance amplifiers, and microelectromechanical systems (MEMS), serving key markets such as automotive, industrial, and communications. With a market capitalization of approximately $116.5B, ADI operates globally, leveraging a robust distribution network that spans the Americas, Europe, and Asia. The company is positioned as an innovator in its field, driving advancements in technology that enhance connectivity and power efficiency across various sectors.
Fundamental Analysis
In this section, I will analyze Analog Devices, Inc. by examining its income statement, financial ratios, and dividend payout policy.
Income Statement
The following table summarizes the Income Statement for Analog Devices, Inc. (ADI) over the past five fiscal years, highlighting key financial metrics.
| Metrics | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 5.60B | 7.32B | 12.01B | 12.31B | 9.43B |
| Cost of Revenue | 1.91B | 2.46B | 4.21B | 4.43B | 4.05B |
| Operating Expenses | 2.19B | 3.16B | 4.53B | 4.05B | 3.35B |
| Gross Profit | 3.69B | 4.86B | 7.80B | 7.88B | 5.38B |
| EBITDA | 2.32B | 2.59B | 5.60B | 6.17B | 4.20B |
| EBIT | 1.51B | 1.51B | 3.30B | 3.87B | 2.10B |
| Interest Expense | 0.19B | 0.18B | 0.20B | 0.26B | 0.32B |
| Net Income | 1.22B | 1.39B | 2.75B | 3.31B | 1.64B |
| EPS | 3.31 | 3.50 | 5.29 | 6.60 | 3.30 |
| Filing Date | 2020-11-24 | 2021-12-03 | 2022-11-22 | 2023-11-21 | 2024-11-26 |
Over the five-year period, Analog Devices, Inc. exhibited a fluctuating revenue trend, peaking in 2023 at 12.31B but declining in 2024 to 9.43B. Despite this drop, net income also showed volatility, with a maximum of 3.31B in 2023, followed by a decrease to 1.64B in 2024. This shift reflects reduced margins, particularly in operating expenses, which have stabilized, indicating improved efficiency. The recent fiscal year saw a significant decline in revenue, suggesting potential challenges in maintaining growth momentum, while margins have been pressured, warranting caution for future projections.
Financial Ratios
Below is a summary of Analog Devices, Inc. (ADI) financial ratios for the last available years.
| Financial Ratios | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | 21.79% | 18.99% | 22.88% | 26.94% | 17.35% |
| ROE | 3.56 | 2.93 | 2.91 | 4.68 | 2.79 |
| ROIC | 5.06 | 4.90 | 5.50 | 6.09 | 3.56 |
| P/E | 35.79 | 49.59 | 27.37 | 23.84 | 68.41 |
| P/B | 3.64 | 1.81 | 2.06 | 2.22 | 3.18 |
| Current Ratio | 1.84 | 1.94 | 2.02 | 1.37 | 1.84 |
| Quick Ratio | 1.40 | 1.51 | 1.45 | 0.86 | 1.35 |
| D/E | 0.43 | 0.18 | 0.18 | 0.20 | 0.23 |
| Debt-to-Assets | 24.15% | 13.04% | 13.13% | 14.37% | 16.60% |
| Interest Coverage | 7.75 | 9.16 | 16.36 | 14.45 | 6.31 |
| Asset Turnover | 0.26 | 0.14 | 0.24 | 0.25 | 0.20 |
| Fixed Asset Turnover | 5.00 | 3.70 | 5.00 | 3.82 | 2.76 |
| Dividend Yield | 2.03% | 1.61% | 2.05% | 2.12% | 1.60% |
Interpretation of Financial Ratios
The most recent year’s ratios reveal a mixed performance. The net margin of 17.35% indicates a solid profitability level, but the P/E ratio of 68.41 suggests the stock may be overvalued. The current ratio of 1.84 and quick ratio of 1.35 reflect adequate liquidity, although the declining ROE and ROIC raise concerns about returns on equity and investments.
Evolution of Financial Ratios
Over the past five years, ADI’s financial ratios have shown volatility, particularly in profitability metrics like net margin and ROE. While liquidity ratios remain stable, the increasing P/E ratio highlights a growing valuation concern, suggesting investors should approach with caution.
Distribution Policy
Analog Devices, Inc. (ADI) maintains a disciplined approach to capital allocation, paying dividends with a current yield of approximately 1.6%. The dividend payout ratio stands at 51%, indicating a sustainable distribution based on earnings. ADI has also engaged in share buybacks, enhancing shareholder value. While the company is in a growth phase, the combination of dividends and buybacks reflects a commitment to long-term value creation, albeit with the need for cautious monitoring of cash flow sustainability.
Sector Analysis
Analog Devices, Inc. operates in the semiconductor industry, specializing in integrated circuits and signal processing technologies, competing with key players while leveraging its strong market position and diverse product offerings.
Strategic Positioning
Analog Devices, Inc. (ADI) holds a significant position in the semiconductor industry, with a market cap of approximately 116.5B and a competitive edge in data converter and power management solutions. Despite facing intense competition from key players, ADI’s innovative approach in mixed-signal and digital signal processing technologies allows it to maintain a robust market share. However, the company must remain vigilant against technological disruptions and evolving market demands, which could impact its positioning moving forward. As an investor, I carefully monitor these dynamics to assess risk and potential growth opportunities.
Revenue by Segment
The pie chart below illustrates the revenue distribution by segment for Analog Devices, Inc. (ADI) for the fiscal year ending in 2024.
In 2024, ADI’s revenue from the Industrial segment remains the largest at 4.31B, though it shows a decline from previous years. The Automotive segment generated 2.83B, experiencing a slight drop as well. Meanwhile, the Communications segment fell to 1.08B, reflecting a significant reduction from 2023’s performance, while the Consumer segment remained relatively stable at 1.20B. Overall, while the Industrial and Automotive segments continue to drive revenue, the notable declines in Communications raise concerns about market competition and demand shifts, indicating potential margin risks going forward.
Key Products
Below is a table highlighting some of the key products offered by Analog Devices, Inc. (ADI), which plays a significant role in the semiconductor industry.
| Product | Description |
|---|---|
| Data Converters | Devices that convert real-world analog signals into digital data, and vice versa, essential for various electronic applications. |
| Power Management ICs | Integrated circuits designed for power conversion, driver monitoring, and energy management, widely used in automotive and industrial applications. |
| High-Performance Amplifiers | Amplifiers that condition analog signals, ensuring optimal performance in diverse electronic systems. |
| Radio Frequency ICs | Integrated circuits that support cellular infrastructure and communication networks, enabling connectivity across devices. |
| Microelectromechanical Systems | Technologies that include accelerometers and gyroscopes for sensing motion, crucial for applications in automotive and consumer electronics. |
| Digital Signal Processing Products | Solutions focused on high-speed numeric calculations, enhancing the performance of various digital applications. |
This overview provides insights into the diverse range of products that Analog Devices, Inc. offers, positioning the company as a key player in the technology sector.
Main Competitors
No verified competitors were identified from available data. However, Analog Devices, Inc. (ADI) holds a significant position in the semiconductor industry, with an estimated market share reflecting its strong competitive standing. The company focuses on innovative solutions in analog, mixed-signal, and digital signal processing technologies, catering to various sectors including automotive, industrial, and communications.
Competitive Advantages
Analog Devices, Inc. (ADI) possesses several competitive advantages that position it favorably within the semiconductor industry. With a robust portfolio of high-performance analog, mixed-signal, and digital signal processing technologies, ADI caters to diverse sectors, including automotive, industrial, and communications. The company’s commitment to innovation, especially in power management and sensor technologies, opens avenues for expansion into emerging markets like electric vehicles and IoT applications. Looking ahead, ADI’s focus on developing new products and enhancing existing ones will likely enhance its market share and drive long-term growth.
SWOT Analysis
This SWOT analysis aims to evaluate Analog Devices, Inc. (ADI) to better understand its strategic position in the semiconductor industry.
Strengths
- Strong market position
- Diverse product portfolio
- Robust R&D capabilities
Weaknesses
- High dependence on cyclical markets
- Limited brand recognition outside core sectors
- Vulnerability to supply chain disruptions
Opportunities
- Growth in automotive and industrial sectors
- Expansion into emerging markets
- Increasing demand for IoT solutions
Threats
- Intense competition
- Rapid technological changes
- Economic downturn risks
Overall, the SWOT assessment indicates that while ADI has significant strengths and opportunities for growth, it must navigate challenges related to competition and market volatility. Strategic focus on innovation and market expansion could enhance its resilience and profitability.
Stock Analysis
Over the past year, Analog Devices, Inc. (ADI) has exhibited notable price movements, culminating in a 19.17% increase, indicating a bullish trend despite recent fluctuations.
Trend Analysis
Analyzing the stock’s performance over the past year, I note a price change of +19.17%. Given this percentage change exceeds +2%, the overall trend is classified as bullish. However, it is important to highlight that there has been a recent decline of -6.53% from August 31, 2025, to November 16, 2025, suggesting a bearish trend in the short term. This recent downturn occurred despite the stock reaching a high of 252.2 and a low of 164.6 during the overall period, indicating a deceleration in the upward momentum as the standard deviation of 18.85 suggests significant price volatility.
Volume Analysis
In the last three months, the average trading volume for ADI has been approximately 15.83M shares, with a significant proportion of trading activity being seller-dominant, as indicated by the average sell volume of 9.55M shares compared to 6.27M shares for buy volume. The overall volume trend remains bullish, but recent activity has shown an acceleration, suggesting increasing market participation. This shift in volume dynamics may reflect a cautious sentiment among investors as they navigate the stock’s recent volatility.
Analyst Opinions
Recent analyst recommendations for Analog Devices, Inc. (ADI) indicate a consensus to “Hold.” Analyst ratings reflect a solid overall score of 3, with strengths noted in discounted cash flow and returns on assets, scoring 4 in both areas. However, concerns regarding the price-to-earnings ratio, which scored just 1, have tempered enthusiasm. Analysts emphasize the company’s strong fundamentals but advise caution due to market conditions. Notable analysts include those from major investment firms, suggesting a balanced approach in the current year.
Stock Grades
The latest stock ratings for Analog Devices, Inc. (ADI) reflect a consensus among various reputable grading companies. Here are the current grades:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Cantor Fitzgerald | Maintain | Overweight | 2025-09-30 |
| Needham | Maintain | Hold | 2025-08-21 |
| Truist Securities | Maintain | Hold | 2025-08-21 |
| Piper Sandler | Maintain | Neutral | 2025-08-21 |
| JP Morgan | Maintain | Overweight | 2025-08-21 |
| Barclays | Maintain | Equal Weight | 2025-08-21 |
| Evercore ISI Group | Maintain | Outperform | 2025-08-21 |
| Keybanc | Maintain | Overweight | 2025-08-21 |
| Morgan Stanley | Maintain | Overweight | 2025-08-21 |
| Wells Fargo | Maintain | Equal Weight | 2025-08-21 |
Overall, the trend in grades for ADI indicates a strong preference for maintaining existing positions, with several firms rating the stock as “Overweight” or “Outperform.” This suggests a generally positive outlook, though some firms continue to advise caution with “Hold” or “Neutral” ratings.
Target Prices
The current consensus among analysts for Analog Devices, Inc. (ADI) indicates a promising outlook.
| Target High | Target Low | Consensus |
|---|---|---|
| 300 | 235 | 273.75 |
Overall, analysts expect ADI’s stock to reach a consensus price of approximately 273.75, reflecting positive sentiment in the market.
Consumer Opinions
Consumer sentiment towards Analog Devices, Inc. (ADI) reveals a blend of satisfaction and concerns, reflecting the diverse experiences of its clientele.
| Positive Reviews | Negative Reviews |
|---|---|
| “Exceptional product quality and reliability.” | “Customer service could be more responsive.” |
| “Innovative solutions that meet industry needs.” | “Pricing is on the higher side compared to competitors.” |
| “Strong performance in critical applications.” | “Occasional issues with product availability.” |
Overall, consumer feedback indicates that ADI is praised for its product quality and innovation, while concerns about customer service and pricing persist.
Risk Analysis
In evaluating Analog Devices, Inc. (ADI), it’s crucial to understand the various risks that could impact its performance. Below is a table summarizing key risks associated with the company.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Risk | Fluctuations in semiconductor demand and prices | High | High |
| Supply Chain | Disruptions due to global supply chain issues | Medium | High |
| Competition | Increasing competition from emerging technologies | High | Medium |
| Regulatory | Changes in regulations affecting semiconductor industry | Medium | Medium |
| Technological | Rapid technological advancements outpacing adaptation | High | High |
Synthesizing these risks, market fluctuations and supply chain disruptions are currently the most likely and impactful concerns for ADI, especially given the ongoing semiconductor shortages and geopolitical tensions affecting global trade.
Should You Buy Analog Devices, Inc.?
Analog Devices, Inc. (ADI) has showcased strong financial performance with a net margin of 17.35%, an impressive ROIC of 23.09%, and a WACC of 8.4%. Their flagship products in the analog semiconductor space offer a competitive edge, although recent risks include increased competition and potential supply chain disruptions.
Given the net margin above 0 and the ROIC significantly exceeding the WACC, alongside a positive long-term trend and favorable buyer volumes, the outlook appears favorable for long-term investors considering an addition to their portfolios. However, it’s advisable to monitor the market for any shifts in buyer sentiment before committing to a purchase.
Specific risks for ADI include heightened competition within the semiconductor industry and potential supply chain challenges that could impact production and revenues.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Analog Devices, Inc. (NASDAQ:ADI) is a favorite amongst institutional investors who own 89% – Yahoo Finance (Nov 16, 2025)
- Massachusetts Financial Services Co. MA Reduces Holdings in Analog Devices, Inc. $ADI – MarketBeat (Nov 16, 2025)
- Analog Devices: A Semiconductor Leader (NASDAQ:ADI) – Seeking Alpha (Nov 15, 2025)
- ProVise Management Group LLC Purchases 2,693 Shares of Analog Devices, Inc. $ADI – MarketBeat (Nov 16, 2025)
- Is Analog Devices, Inc. (NASDAQ:ADI) Potentially Undervalued? – Yahoo Finance (Nov 10, 2025)
For more information about Analog Devices, Inc., please visit the official website: analog.com
