ADI Projects $2.27B Q3 Revenue, Exceeds Expectations

Analog Devices (ADI) has announced that it expects third-quarter revenue to surpass Wall Street predictions, driven by a resurgence in demand for its industrial chips. This positive forecast has led to an over 8% rise in ADI’s stock price.

The optimistic projection suggests that ADI’s customers are managing their existing inventories effectively and beginning to place new orders despite economic slowdown indicators. CEO Vincent Roche stated, "We believe that the inventory rationalization across our broad customer base is stabilizing, paving the way for sequential growth to resume in the third quarter." He noted that the company is at the beginning of a cyclical recovery.

According to LSEG data, ADI anticipates Q3 revenue to reach $2.27 billion, with a variance of $100 million, compared to the expected $2.16 billion. Adjusted earnings per share are projected to be $1.50, with a variance of $0.10, against the forecasted $1.34 per share.

During the earnings call, ADI also emphasized its advancements in artificial intelligence (AI) and projected "record revenue" for its chip testing segment in the near to medium term, driven by strong demand for high-bandwidth memory (HBM) chips.

This performance aligns with a strong forecast from Texas Instruments, enhancing optimism for rising demand in the analog chip market.

For the second quarter ending May 4, ADI reported revenue of $2.16 billion, exceeding the analyst average estimate of $2.11 billion. Adjusted earnings per share were $1.40, above the expected $1.26 per share.

ADI's industrial segment revenue was $1.01 billion, surpassing analyst expectations of $952.2 million, bolstered by robust performance in aerospace and defense. However, automotive segment revenue was $658.2 million, slightly below the anticipated $666.5 million, as the electric vehicle sector faces procurement slowdowns, prompting automakers to curb new chip purchases.