Analog Devices Unlocks New Growth Engines In AI, Aerospace, And Robotics

Thu, Aug 21, 2025, 11:40 AM 2 min read

Analog Devices (NASDAQ:ADI) delivered stronger-than-expected quarterly results on Wednesday and issued an upbeat outlook, signaling momentum across industrial and communications markets while highlighting new structural growth drivers in AI, aerospace, and automation.

Following the results, JP Morgan analyst Harlan Sur maintained an Overweight rating on ADI and increased the price forecast from $300 to $310.

Sur cited a stronger cyclical recovery and expanding secular drivers. He lifted his forward estimates, projecting fiscal 2026 EPS of ~$8.85, and applied a 35x multiple, the high end of peer group valuations, reflecting ADI’s premium margins and diversified growth profile.

Also Read: Analog Devices Eyes Solid Finish To 2025 Fueled By Strong Industrial, Auto Sales

Sur noted that July-quarter revenue rose 9% Q/Q to $2.88 billion, beating consensus of $2.765 billion, with EPS at $2.05 vs. $1.95 expected.

Growth was broad-based: industrial climbed 11% Q/Q and 23% Y/Y, communications surged 18% Q/Q and 42% Y/Y on AI networking strength, and consumer rose 17% Q/Q and 20% Y/Y.

Automotive stayed flat sequentially but gained 23% Y/Y due to product cycles and China demand pull-forward.

For the October quarter, ADI guided revenue to $3.0 billion (up 4% Q/Q), topping consensus of $2.823 billion, with EPS of $2.22 vs. $2.03 expected and operating margin of 43.5% vs. 42.4% consensus.

Industrial is expected to lead growth with low-to-mid-teens sequential gains, while automotive should decline in the low-teens Q/Q as earlier pull-forwards unwind.

Sur highlighted ADI’s structural growth engines, including aerospace & defense now trending above $1 billion annually (~10% of revenue), AI/datacenter opportunities in optical networking and power systems rising toward $550 million–$600 million annually vs. $400 million in fiscal 2024, and industrial automation tailwinds from humanoid robotics design wins.

Sur also cited strong capital returns, with $3.7 billion in free cash flow (35% margin) over the past 12 months and $1.6 billion returned to shareholders via dividends and buybacks.

Price Action: ADI stock is trading higher by 1.73% to $249.04 at last check Thursday.

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