We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ADI's Automotive Segment is Booming: Is the Momentum Sustainable?
Read MoreHide Full Article
Key Takeaways
Analog Devices' automotive unit rose 22.4% in Q2, fueled by connectivity and power solutions.
The segment expanded from 20% of fiscal 2022 revenues to 30% in fiscal 2024.
ADI guides Q4 automotive decline due to EV credit expiration and tariff risks.
Analog Devices’ (ADI - Free Report) automotive segment, which offers products like high-performance signal processing solutions for advanced vehicle systems like infotainment, electrification and autonomous applications, is delivering record revenue growth for the past two quarters.
The automotive segment has grown to contribute 30% of fiscal 2024 revenues from 20% in fiscal 2022. In the second quarter of fiscal 2025, it grew 22.4% year over year, driven by traction in auto connectivity, ADAS, infotainment, and power solutions.
ADI has maintained a strong position in the automotive segment through its partnership with global manufacturers. The company has developed a deep expertise and extensive portfolio of analog, digital, power and sensor ICs that address the immediate needs of the industry.
ADI’s portfolio covers products for enriching the in-cabin experience, low emission, navigation, car audio, voice processing and connectivity, battery monitoring and management systems and video processing and connectivity.
Despite its deep domain expertise and strong financial results in the past couple of quarters, ADI expects its fourth-quarter automotive revenues to decline, as discussed on its earnings call. The company provided a conservative automotive outlook, citing EV credits expiration and a risk of tariffs affecting production.
How Competitors Fare Against Analog Devices
Analog Devices competes with Texas Instruments (TXN - Free Report) and STMicroelectronics (STM - Free Report) in the Automotive segment. Texas Instruments competes with ADI in Analog sensors, power ICs, in-vehicle networking/signal chain, and driver assistance electronics.
STMicroelectronics competes in sensors like MEMS and inertial, analog front ends, interface ICs, and microcontrollers. Both Texas Instruments and STMicroelectronics compete with ADI in the broader scope in the Industrial and communication segment.
ADI’s Price Performance, Valuation and Estimates
Shares of ADI have gained 16.4% year to date compared with the Semiconductor - Analog and Mixed industry’s growth of 13.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, ADI trades at a forward price-to-sales ratio of 10.13X, higher than the industry’s average of 7.75X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ADI’s fiscal 2025 and 2026 earnings implies year-over-year growth of 21.5% and 19.4%, respectively. The consensus estimate for fiscal 2025 and 2026 has been revised upward in the past 30 days.
Image: Bigstock
ADI's Automotive Segment is Booming: Is the Momentum Sustainable?
Key Takeaways
Analog Devices’ (ADI - Free Report) automotive segment, which offers products like high-performance signal processing solutions for advanced vehicle systems like infotainment, electrification and autonomous applications, is delivering record revenue growth for the past two quarters.
The automotive segment has grown to contribute 30% of fiscal 2024 revenues from 20% in fiscal 2022. In the second quarter of fiscal 2025, it grew 22.4% year over year, driven by traction in auto connectivity, ADAS, infotainment, and power solutions.
ADI has maintained a strong position in the automotive segment through its partnership with global manufacturers. The company has developed a deep expertise and extensive portfolio of analog, digital, power and sensor ICs that address the immediate needs of the industry.
ADI’s portfolio covers products for enriching the in-cabin experience, low emission, navigation, car audio, voice processing and connectivity, battery monitoring and management systems and video processing and connectivity.
Despite its deep domain expertise and strong financial results in the past couple of quarters, ADI expects its fourth-quarter automotive revenues to decline, as discussed on its earnings call. The company provided a conservative automotive outlook, citing EV credits expiration and a risk of tariffs affecting production.
How Competitors Fare Against Analog Devices
Analog Devices competes with Texas Instruments (TXN - Free Report) and STMicroelectronics (STM - Free Report) in the Automotive segment. Texas Instruments competes with ADI in Analog sensors, power ICs, in-vehicle networking/signal chain, and driver assistance electronics.
STMicroelectronics competes in sensors like MEMS and inertial, analog front ends, interface ICs, and microcontrollers. Both Texas Instruments and STMicroelectronics compete with ADI in the broader scope in the Industrial and communication segment.
ADI’s Price Performance, Valuation and Estimates
Shares of ADI have gained 16.4% year to date compared with the Semiconductor - Analog and Mixed industry’s growth of 13.8%.
Image Source: Zacks Investment Research
From a valuation standpoint, ADI trades at a forward price-to-sales ratio of 10.13X, higher than the industry’s average of 7.75X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ADI’s fiscal 2025 and 2026 earnings implies year-over-year growth of 21.5% and 19.4%, respectively. The consensus estimate for fiscal 2025 and 2026 has been revised upward in the past 30 days.
Image Source: Zacks Investment Research
ADI currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.