Analog Devices: Structural Compounding, Now In The Print Edition

2025-09-01 07:19:41 ET

Investment Thesis

Back on July 29 , I described Analog Devices (ADI) as a structural compounder and leaned into the thesis that this is more than a cyclical rebound. Since that note (published at ~$230.75), the stock is up ~9.0% compared to ~1.3% for the S&P. I think that Analog Devices will continue to show why it is different from mainstream analog peers. The recent Q3 FY25 results reinforced that the recovery is more than cyclical but structural and supported by secular demand in the world of artificial intelligence ((AI)), electric vehicles (EVs), industrial automation, and precision healthcare. Revenue increased above expectations, margin expanded significantly, and management commentary reinforced that bookings continue to be ahead of shipments across the key verticals. With this combination of growth visibility, structural margin benefit, and disciplined capital allocation, ADI is in a unique spot: it is capturing the cyclical recovery benefit but doing it in the context of harvesting long-term compounding opportunity....

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