Manufacturer of analog chips Analog Devices (NASDAQ:ADI) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 39.6% year on year to $4.02 billion. On top of that, next quarter’s revenue guidance ($4.3 billion at the midpoint) was surprisingly good and 5.4% above what analysts were expecting. Its non-GAAP profit of $3.45 per share was 3.3% above analysts’ consensus estimates.
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Analog Devices (ADI) Q2 CY2026 Highlights:
- Revenue: $4.02 billion vs analyst estimates of $3.92 billion (39.6% year-on-year growth, 2.6% beat)
- Adjusted EPS: $3.45 vs analyst estimates of $3.34 (3.3% beat)
- Adjusted Operating Income: $2.01 billion vs analyst estimates of $1.93 billion (50% margin, 4.3% beat)
- Revenue Guidance for Q3 CY2026 is $4.3 billion at the midpoint, above analyst estimates of $4.08 billion
- Adjusted EPS guidance for Q3 CY2026 is $3.86 at the midpoint, above analyst estimates of $3.55
- Operating Margin: 40.1%, up from 28.4% in the same quarter last year
- Free Cash Flow Margin: 36.3%, down from 37.7% in the same quarter last year
- Inventory Days Outstanding: 134, down from 142 in the previous quarter
- Market Capitalization: $183.5 billion
“ADI delivered a strong third quarter, exceeding the midpoint of our revenue, margin, and earnings outlook as we capitalized on broad-based demand,” said Vincent Roche, CEO and Chair.
Company Overview
Founded by two MIT graduates, Ray Stata and Matthew Lorber in 1965, Analog Devices (NASDAQ:ADI) is one of the largest providers of high performance analog integrated circuits used mainly in industrial end markets, along with communications, autos, and consumer devices.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Analog Devices grew its sales at an impressive 16.4% compounded annual growth rate. Its growth beat the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore’s Law) could make yesterday’s hit product obsolete today. Analog Devices’s annualized revenue growth of 19.6% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. 
This quarter, Analog Devices reported wonderful year-on-year revenue growth of 39.6%, and its $4.02 billion of revenue exceeded Wall Street’s estimates by 2.6%. Beyond the beat, this marks 6 straight quarters of growth, showing that the current upcycle has had a good run – a typical upcycle usually lasts 8-10 quarters. Company management is currently guiding for a 39.8% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 20.3% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its newer products and services will not lead to better top-line performance yet.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’s capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Analog Devices’s DIO came in at 134, which is 6 days above its five-year average. These numbers suggest that despite the recent decrease, the company’s inventory levels are higher than what we’ve seen in the past.
Key Takeaways from Analog Devices’s Q2 Results
It was great to see Analog Devices’s revenue guidance for next quarter top analysts’ expectations. We were also glad its operating income outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 1.7% to $383 immediately after reporting.
Analog Devices had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
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