ADI Unveils $10B Stock Buyback, Shares Surge 9.74%

On February 19, 2025, Analog Devices, Inc. (ADI), a leading provider of analog chips and digital signal processors (DSP), released its first-quarter financial results for the fiscal year 2025, covering the period ending February 1, 2025. The company exceeded expectations with strong overall performance, complemented by an announcement of an increased quarterly dividend and an expanded stock buyback program, boosting its buyback authorization to $11.5 billion. As a result, ADI's stock surged by 9.74% on February 19.

In detail, ADI's Q1 revenue decreased by 3.6% year-over-year, reaching $2.42 billion, surpassing the consensus estimate of $2.36 billion. Net income stood at $391 million, down 15.43% from the previous year, while adjusted earnings per share (EPS) were $1.63, exceeding analysts' expectations of $1.54 per share.

The company highlighted a 19% year-over-year increase in revenue from its consumer-related segment, which amounted to $322.9 million. This growth was largely driven by the rising adoption of AI devices, high-end smartphones, and smart home products.

Vincent Roche, ADI's Chairman and CEO, remarked, “Despite challenging macroeconomic and geopolitical conditions, both our revenue and earnings exceeded the midpoint of our forecasted range for the first quarter. Our recovery has been supported by improvements in cyclical dynamics and the successful conversion of new business opportunities in our core markets into revenue.”

Chief Financial Officer Richard Puccio noted, "Bookings continued to show gradual improvement in Q1, with strong performances in industrial and automotive sectors helping us achieve quarter-over-quarter and year-over-year growth. We are confident in ADI's ability to return to growth in fiscal year 2025."

Looking ahead, ADI forecasts Q2 revenue to be $2.5 billion (plus or minus $100 million), surpassing the consensus estimate of $2.46 billion. Adjusted EPS is projected to be $1.68 (plus or minus $0.10), also exceeding analysts' expectations of $1.66 per share.

In the earnings call, CEO Vincent Roche further discussed the company's outlook, stating, "While the overall economic environment continues to influence our recovery pace, low channel inventories and gradual improvements in orders over the past 18 months suggest that the cyclical downturn has passed. The trend is shifting in favor of the company."

Edward Jones technology analyst Logan Purk believes that ADI stands to benefit from the growing automation trends, including robotics and smart devices. Additionally, the increasing market acceptance of hybrid and electric vehicles is expected to drive higher demand for analog chips.

Additionally, ADI announced an 8% increase in its quarterly dividend to $0.99 per share and a $10 billion increase to its stock repurchase program, bringing the total buyback authorization to approximately $11.5 billion, representing about 9.8% of the company's current market capitalization of $117.4 billion.

Following these announcements, ADI's stock rose 9.74% to $241.66 per share on February 19, marking its highest closing price since July 16, 2024.