Manufacturer of analog chips Analog Devices (NASDAQ: ADI) beat Wall Street’s revenue expectations in Q1 CY2026, with sales up 37.2% year on year to $3.62 billion. On top of that, next quarter’s revenue guidance ($3.9 billion at the midpoint) was surprisingly good and 8.1% above what analysts were expecting. Its non-GAAP profit of $3.09 per share was 6.2% above analysts’ consensus estimates.
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Analog Devices (ADI) Q1 CY2026 Highlights:
- Revenue: $3.62 billion vs analyst estimates of $3.52 billion (37.2% year-on-year growth, 3% beat)
- Adjusted EPS: $3.09 vs analyst estimates of $2.91 (6.2% beat)
- Adjusted Operating Income: $1.77 billion vs analyst estimates of $1.67 billion (49% margin, 6% beat)
- Revenue Guidance for Q2 CY2026 is $3.9 billion at the midpoint, above analyst estimates of $3.61 billion
- Adjusted EPS guidance for Q2 CY2026 is $3.30 at the midpoint, above analyst estimates of $3.01
- Operating Margin: 38.1%, up from 25.7% in the same quarter last year
- Free Cash Flow Margin: 20.3%, down from 27.6% in the same quarter last year
- Inventory Days Outstanding: 142, down from 144 in the previous quarter
- Market Capitalization: $202.3 billion
"ADI's second quarter revenue and earnings were above the high end of our outlook, reflecting the combination of record demand and sharp operational discipline," 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
Examining a company’s long-term performance can provide clues about its 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 15.5% compounded annual growth rate. Its growth beat the average semiconductor company and shows its offerings resonate with customers, a helpful starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Analog Devices’s annualized revenue growth of 10.3% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Analog Devices reported wonderful year-on-year revenue growth of 37.2%, and its $3.62 billion of revenue exceeded Wall Street’s estimates by 3%. Beyond the beat, this marks 5 straight quarters of growth, implying that Analog Devices is in the middle of its cycle - a typical upcycle generally lasts 8-10 quarters. Company management is currently guiding for a 35.4% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 15.6% over the next 12 months. Although this projection implies its newer products and services will catalyze better top-line performance, it is still below the sector average. At least the company is tracking well in other measures of financial health.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ 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 142, which is 16 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 Q1 Results
We were impressed by Analog Devices’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also glad its adjusted operating income outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The market seemed to be hoping for more, and the stock traded down 1.2% to $409.15 immediately after reporting.
Is Analog Devices an attractive investment opportunity right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
