Analog Devices' Q3 2025: Navigating Contradictions in Industrial Demand, Automotive Trends, and Gross Margins

Industrial demand and supply dynamics, automotive market trends, industrial market performance and demand outlook, and gross margin expectations and influencing factors are the key contradictions discussed in Analog Devices' latest 2025Q3 earnings call.



Industrial Recovery and Growth:
- Industrial revenue represented 45% of Analog Devices' third-quarter revenue, up 12% sequentially and 23% year-over-year.
- Growth was driven by a strong recovery across industrial sectors, including aerospace, defense, and automation.

Communications Segment Performance:
- Communications revenue accounted for 13% of the quarterly revenue, with an 18% sequential increase and 40% year-over-year growth.
- The increase was primarily due to the continued build-out of AI demand, particularly in wireline and data center segments.

Record Automotive Revenue:
- Automotive revenue accounted for 30% of the quarterly revenue, with a record level expected for 2025, despite a 1% sequential decline.
- The growth was supported by content and share gains in ADAS and infotainment systems, along with some order acceleration.

Gross Margin Expectations:
- Third-quarter gross margin was 69.2%, with expectations for a return to 70% in the fourth quarter.
- The anticipated increase is due to improved utilization and a higher industrial mix in revenue.