Analog Devices (NASDAQ:ADI) Chief Financial Officer Rich Puccio said the company expects demand strength across its portfolio to support double-digit growth into fiscal 2027, citing broad-based recovery in industrial markets alongside continued momentum in data centers, aerospace and defense, and automated test equipment.
Speaking with JPMorgan analyst Harlan Sur at the firm’s 2026 U.S. All Stars Conference in London, Puccio said the company’s growth has expanded beyond the early-cycle strength it saw in certain specialized businesses. He said Analog Devices is now seeing growth “across pretty much all of the end markets” and geographies.
Demand Outlook and Inventory
Puccio declined to provide a mid-quarter bookings update or formal guidance for the January quarter, but said Analog Devices expects to perform better than its normal seasonal pattern. The company’s first fiscal quarter is typically down in the mid-single digits sequentially, he said, but current conditions suggest it can deliver an “above-seasonal” quarter.
The CFO said the company is receiving orders further into the future than it had six months ago, improving visibility into the second quarter. That added visibility is useful because Analog Devices begins wafer production about six months before product delivery, he said.
Analog Devices has been deliberately rebuilding inventory on its balance sheet and supplying additional inventory to distribution channels. However, Puccio said accelerating sell-through is offsetting those efforts. He expects gross inventory to rise in the fourth quarter while inventory days remain flat, and expects channel inventory to stay slightly below the company’s target of six to seven weeks.
He characterized the demand environment as uneven across product lines. In data centers, aerospace and defense, and automated test equipment, Analog Devices is already shipping at or above historical consumption levels, according to Puccio. Other businesses remain below those levels, however. More than half of the company’s industrial subsegments remain double digits below the consumption line, he said.
Puccio added that the company has not yet seen a broad customer inventory-replenishment cycle. Instead, he said demand in the faster-growing segments reflects visible end-market requirements rather than customers building excess stock.
Data Center, Defense and Test Equipment Growth
Analog Devices’ aerospace and defense business was nearing a $2 billion annualized revenue run rate as of the fiscal third-quarter exit rate, up from approximately $1 billion a year earlier, Puccio said. The business includes government contracts and commercial products used in satellites, drones and missile-defense systems.
Puccio said the company believes its aerospace and defense franchise can grow at a double-digit rate for the next decade, supported by defense-spending trends and Analog Devices’ portfolio of mixed-signal, RF and related technologies.
Its automated test equipment business was operating at an annualized revenue run rate of about $1 billion exiting the third quarter. Puccio said higher-bandwidth memory and high-performance computing are increasing the complexity of semiconductor testers, driving more Analog Devices content per system.
The company’s data center business is running at about $2 billion annually, split roughly equally between power and optical products, he said. The business has been growing about 100% year over year, according to Sur.
Puccio said Analog Devices is expanding its power offerings from the electric grid to the chip, including power management, conversion and delivery. He highlighted the company’s Empower acquisition as a way to participate in vertical power delivery near processors. The company estimates that its technology could reduce power loss by more than 15% in certain data center applications, he said.
In optical networking, Puccio said Analog Devices supplies optical control systems, including products used to control lasers. The company is shipping 1.6-terabit solutions and sees future opportunities as data center networking speeds advance.
Design Wins, Acquisitions and Margins
Puccio said Analog Devices is on track in fiscal 2026 to exceed the design-win growth it achieved in fiscal 2025, with particularly strong momentum in data centers and aerospace and defense. He said design wins are an important indicator of the company’s opportunities over the next three to five years.
He also discussed Analog Devices’ pending acquisition of Alif Semiconductor, which supplies low-power microcontroller and compute products designed for artificial intelligence edge applications. Puccio said the transaction will accelerate Analog Devices’ ability to offer integrated systems that sense, compute and act at the physical edge, including in robotics and other applications where lower latency, power use and data transfer can be important.
The deal had not closed at the time of the conference, and Puccio said it is not expected to be material to revenue or costs in the near term. He said the business is more likely to ramp beginning around 2028.
On pricing, Puccio said Analog Devices has implemented two price increases, including one largely directed at distribution channels and a more recent increase applied broadly to customers. He said the actions are intended to recover sustained inflation in areas such as wafers, assembly and transportation, rather than expand margins. The company has no additional pricing actions currently planned.
Puccio said Analog Devices guided for a record gross margin in the fourth quarter. He identified a greater industrial revenue mix, stronger fixed-cost absorption from revenue growth and potential future pricing actions as factors that could support margins. He also reaffirmed the company’s long-term free-cash-flow margin model of 34% to 40% of revenue.
About Analog Devices (NASDAQ:ADI)
Analog Devices, Inc (NASDAQ: ADI) is a global semiconductor company that designs and manufactures high-performance analog, mixed-signal, power-management and radio-frequency integrated circuits. Its technologies help convert real-world signals—such as temperature, pressure, sound, motion and light—into data that electronic systems can process and use.
The company offers data converters, amplifiers, power-management products, sensors, embedded processors, connectivity solutions and other semiconductor components.
