Analog Devices Surges 10% as it Beat Profit and Sales Estimates

Analog Devices ( ADI ), a semiconductor manufacturer, has reported better-than-expected results and guidance as inventory backlogs eased. The company's fiscal second-quarter adjusted earnings per share (EPS) of $1.40 beat estimates, while revenue slumped 34% year-over-year to $2.16 billion, but that was above forecasts. CEO Vincent Roche explained that revenue exceeded the midpoint of its outlook despite continued macro and inventory headwinds. However, he pointed out that inventory rationalization across the broad customer base is stabilizing, clearing a path for the company to return to sequential growth in the third quarter.

Analog Devices ( ADI ) sees current-quarter adjusted EPS of $1.50, plus or minus $0.10, with revenue of $2.27 billion, plus or minus $100 million. Both midpoints were higher than anticipated.

Analog Devices ( ADI ) forecasts robust quarterly revenue on chip market recovery, thanks to a rise in demand for its industrial chips after a prolonged slump. The upbeat forecast signals that clients are placing new orders amid signs of an easing economy. The company expects revenue of $2.27 billion, plus or minus $100 million, for the third quarter, compared with estimates of $2.16 billion, according to LSEG data.

Analog Devices ( ADI ) also touted its artificial intelligence efforts and expects to drive "record revenues" for its chip testing segment in the near to mid-term due to strong demand for high-bandwidth memory chips. The company's results follow a strong forecast from chipmaker Texas Instruments, fanning optimism for a rise in analog chip demand.

Technical Outlook
Analog Devices ( ADI ) stock is currently overbought with a Relative Strength Index (RSI) of 82. The stock is up 10.87% as of the time of writing and up 18% since the start of 2024.