Analog Devices 2025 Q4 Earnings Strong Performance as Net Income Surges 64.8%

Analog Devices (ADI) reported Q4 2025 earnings that exceeded expectations, with revenue rising 25.9% to $3.08 billion and EPS increasing 66.2% to $1.60. The company’s guidance for Q1 2026 was in line with expectations, reflecting confidence in sustained growth across key markets.

Revenue

Analog Devices’ total revenue surged to $3.08 billion in Q4 2025, a 25.9% increase from $2.44 billion in Q4 2024. The industrial segment led with $1.43 billion in revenue, a 34% year-over-year jump, driven by robust demand in factory automation, defense, and energy infrastructure. Communications revenue reached $389.8 million, surpassing forecasts, while automotive and aerospace/defense markets also contributed to the top-line growth.

Earnings/Net Income

The company’s EPS rose 66.2% to $1.60 in Q4 2025, with net income climbing 64.8% to $787.74 million. This marked a continuation of ADI’s 20-year streak of profitability, underscoring operational resilience. The EPS growth was particularly notable, as it reflected both revenue expansion and improved margins.

Price Action

The stock price of Analog Devices surged 9.29% during the latest trading day, with a 9.51% gain for the week and 5.89% month-to-date.

Post-Earnings Price Action Review

The strategy of buying Analog Devices (ADI) shares after a quarterly revenue drop on the earnings release date and selling 30 days later resulted in poor performance. The strategy had a CAGR of -0.43% and an excess return of -61.99%, significantly underperforming the benchmark return of 60.81%. Additionally, the strategy had a maximum drawdown of 0.00%, indicating it did not experience any significant losses during the backtest period, but its Sharpe ratio was -0.02, suggesting the risk-adjusted return was not favorable.

CEO Commentary

Vincent Roche, CEO & Chair of Analog Devices, highlighted Q4 2025’s outperformance, with revenue and EPS surpassing guidance midpoints. He emphasized growth in industrial, automotive, and communications markets, driven by AI, automation, and energy efficiency trends. Strategic priorities include R&D in analog, mixed-signal, and AI technologies, alongside expanding software capabilities. Roche noted Maxim acquisition synergies and expressed optimism about FY 2026, citing strong design pipelines and AI-driven demand.

Guidance

CFO Richard Puccio provided Q1 2026 guidance: revenue of $3.1 billion (±$100 million), EPS of $2.29 (±$0.10), operating margin of 43.5% (±100 bps), and a tax rate of 12-14%. Roche expects industrial and communications to lead growth, supported by AI infrastructure demand, while cautioning about auto sector risks from tariffs and macroeconomic volatility.

Additional News

Analog Devices announced a $0.99/share quarterly dividend, maintaining its payout for four consecutive quarters, and reaffirmed its commitment to shareholder returns. The company also highlighted $4.3 billion in fiscal 2025 free cash flow, reflecting strong liquidity. Evercore ISI lowered its price target to $282 from $303 while maintaining an "Outperform" rating, citing ADI’s secular exposure and cyclical recovery. Additionally, ADI’s acquisition of Maxim’s manufacturing operations in Penang, Malaysia, was cited as a strategic move to optimize supply chain efficiency.