ADI Climbs 35.7% in a Year: Should You Buy, Sell or Hold the Stock?

Core Insights - Analog Devices (ADI) shares have appreciated 35.7% over the past 12 months, outperforming the Zacks Semiconductor - Analog and Mixed industry and the Zacks Computer and Technology sector, which appreciated 27.2% and 26.4% respectively [1][9] - The strong performance is attributed to double-digit growth across industrial, automotive, communications, and consumer segments, driven by AI infrastructure demand [1][9] Segment Performance - The industrial segment has seen growth due to demand for automatic test equipment systems, benefiting from AI chip demand [5] - In the communications segment, there is strong demand for electro-optical interfaces, with the data center business surpassing a $1 billion run rate in Q4 of fiscal 2025 [6] - ADI's data center business has been growing over 50% year over year for the past three quarters, with expectations for significant long-term growth in robotics driven by AI advancements [7] Revenue and Earnings Estimates - ADI expects revenues of $3.1 billion (+/- $100 million) for Q1 of fiscal 2026, with a Zacks Consensus Estimate of $3.11 billion, indicating a year-over-year growth of 28.2% [8] - The Zacks Consensus Estimate for Q1 fiscal 2026 earnings is $2.28, reflecting a year-over-year growth of 40% [14] Margin and Competitive Landscape - ADI has maintained a non-GAAP operating margin of 41.9% in fiscal 2025, up 20% year over year, despite rising costs and competition [10] - The company faces competition from Texas Instruments, STMicroelectronics, and NXP Semiconductors, but strong revenue growth has helped protect its margins [11][13] Technical Indicators - ADI shares are trading above the 50-day and 200-day simple moving averages, indicating a bullish trend [15] Investment Recommendation - Given the accelerating AI-driven growth, broad-based segment strength, and resilient margins, ADI is positioned as an attractive long-term investment opportunity [17]