What risks could affect ADI's EPS forecasts for Q2 2025?

**Analog Devices' (ADI) Q2 2025 EPS forecasts are subject to several risks** that could impact their accuracy. Here are the key risks to consider:

1. **Excess Supply and Inventory Rationalization**: ADI is grappling with excess supply in the industrial and automotive sectors, which is leading to inventory rationalization. This process is expected to continue in Q2 2025, potentially affecting sales and profitability. The company's guidance for Q2 reflects this challenge, with revenue projections below analyst estimates.
2. **Challenging Macro and Geopolitical Environment**: ADI operates in a complex macroeconomic environment with geopolitical uncertainties. These factors can impact demand for semiconductor products and contribute to the inventory rationalization seen in Q2 2025. The ongoing conflicts in Ukraine, Israel, and the Middle East, along with global trade tensions, add to the volatility.
3. **Automotive Sector Slowdown**: The automotive industry is experiencing a slowdown in chip orders due to high interest rates, which is affecting ADI's growth in this sector. The company has reported a near-two-year low in growth for the automotive unit. As interest rates remain elevated, the automotive market is expected to face continued headwinds, potentially impacting ADI's performance in this area.
4. **Industrial Sector Decline**: The industrial sector, which accounts for nearly 50% of ADI's revenue, has seen a 31% decline in the first quarter due to the supply glut. This trend could continue in Q2 2025 if the inventory rationalization is not fully resolved. The global economic slowdown and the need for inventory clearance in this sector pose significant risks to ADI's revenue and EPS.
5. **Geopolitical Risks**: ADI's operations and supply chain are susceptible to geopolitical risks, including increased tariffs, trade wars, and other political instabilities. These factors can disrupt the company's ability to source materials and sell products, impacting profitability.

In summary, ADI's Q2 2025 EPS forecasts are at risk due to excess supply and inventory rationalization, challenging macro and geopolitical conditions, a slowdown in the automotive sector, decline in the industrial sector, and geopolitical risks. These factors could lead to lower-than-expected revenue and profitability for the quarter.