Analog Devices Q2 2025: Unpacking Contradictions in Automotive Growth and Industrial Recovery

Industrial demand recovery and undershipment, automotive market growth and market trends, automotive market performance and industrial market recovery are the key contradictions discussed in Analog Devices' latest 2025Q2 earnings call.



Revenue Growth and Market Recovery:
- Analog Devices reported record revenue of $2.64 billion for Q2, up 9% sequentially and 22% year-over-year.
- Growth was driven by broad-based double-digit year-over-year growth across all end markets and a cyclical upturn from 2024's revenue bottom.

Automotive Segment Performance:
- Automotive revenue accounted for 32% of the total, increasing by 16% sequentially and 24% year-over-year.
- The growth was fueled by strong demand for connectivity and functionally safe power solutions, particularly in China, with a sequential increase in Europe and North America.

Industrial Segment Recovery:
- Industrial revenue comprised 44% of the quarterly revenue, growing by 8% sequentially and 17% year-over-year.
- The recovery was broad-based with all subsectors and regions increasing sequentially, driven by aerospace, defense, and ATE.

Communications Segment Dynamics:
- Communications revenue constituted 12% of the quarterly revenue, up 5% sequentially and 32% year-over-year.
- Growth was primarily driven by wireline and data center, contributing to approximately 2/3 of the total communications business, due to AI build-outs.

Operating Margin and Financial Performance:
- Second quarter operating margin was 41.2%, with an increase driven by higher utilization, nonoperating expenses finished at $54 million, and a tax rate of 11%.
- EPS was $1.85, up 32% year-over-year, exceeding the high end of the guided range primarily due to strong sequential and year-over-year revenue growth.