ADI's AI-Based Data Center Products Gain Traction: What's Ahead?

Analog Devices ADI is experiencing robust traction for its data center products. ADI’s data center business is emerging as a key AI-driven growth engine and has increased 50% year over year in fiscal 2025 and continued to accelerate in the first quarter of fiscal 2026, supported by rising AI infrastructure investments.

As AI systems need higher processing speeds, power density and data movement, the system complexity is continuously increasing, directly benefiting ADI’s analog, mixed-signal, power and optical portfolios. ADI is positioned across both power delivery and power control, with hot-swap and protection products accounting for about one-third of data center power revenues.

The adoption of higher-voltage architectures, mainly 48V and 54V, and vertical power is expanding its serviceable market, while DC power control and multiphase controllers enable efficient GPU and CPU power regulation.

Optical connectivity is another tailwind as AI networking shifts toward optical circuit switching. ADI’s precision control and monitoring solutions help improve bandwidth density and reduce cost per bit.

Considering these factors, ADI expects the combined ATE and data center opportunity to be more than $2 billion run rate, contributing approximately 20% to its top line while sustaining double-digit growth for the upcoming years.

How Competitors Fare Against ADI

Broadcom AVGO is a leader in the domain of custom silicon solutions for data centres. Broadcom’s advanced 3.5D XDSiP packaging platform is critical to ensure the performance and efficiency of custom AI XPUs. Broadcom’s Semiconductor segment, which accounts for its custom silicon solutions, has experienced massive growth in the past several quarters.

Advanced Micro Devices AMD is another established player in the custom silicon solutions and AI accelerator market. AMD offers semi-custom SoCs and Instinct Accelerators to power data centers. Moreover, Advanced Micro Devices’ reconfigurable Alveo Adaptable Accelerator Cards are critical for compute-intensive applications in data centers.

Seeing the growth of AI-data centers and allied networking required to run the AI workload, companies in this space, including Analog Devices, Advanced Micro Devices and Broadcom, have sufficient growth opportunities.

ADI’s Price Performance, Valuation and Estimates

Shares of ADI have gained 58.3% in the past one year compared with the Semiconductor - Analog and Mixed industry’s growth of 49.4%.

ADI Twelve Month Performance Chart

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From a valuation standpoint, ADI trades at a forward price-to-sales ratio of 12.31X, higher than the industry’s average of 9.34X.

ADI Forward 12-Month (P/S) Performance Chart

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The Zacks Consensus Estimate for ADI’s fiscal 2026 and 2027 earnings implies year-over-year growth of 42.49% and 11.16%, respectively. The consensus estimate for fiscal 2025 and 2026 has remained unchanged in the past seven days.

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ADI currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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