Analog Devices (ADI) delivered a strong fiscal second-quarter performance, surpassing Wall Street expectations, while also unveiling a $1.5 billion cash acquisition to strengthen its position in the rapidly growing AI power management semiconductor market.
Record Quarterly Results
For the fiscal second quarter ended May 2, 2026, the company reported revenue of $3.62 billion, a 37% increase year-over-year. Adjusted diluted earnings per share reached $3.09, up from $1.85 in the same period last year. On a reported GAAP basis, diluted EPS more than doubled to $2.40. The results comfortably exceeded analyst estimates, which had pegged revenue at $3.51 billion and adjusted EPS at $2.90, according to LSEG data from Reuters.
CEO Vincent Roche highlighted that the quarter surpassed the company's own internal forecasts, citing "record demand" across its business segments. CFO Richard Puccio added that the company saw "record bookings across our B2B markets," noting the strength was not limited to AI-related demand.
Segment Performance
Industrial sales, which account for roughly half of total revenue, surged 56% to $1.80 billion. Communications revenue jumped 79% to $555 million, driven by strong demand for infrastructure components. Automotive revenue, however, saw only modest growth of 2% to $872 million, reflecting ongoing mixed conditions in the automotive chip market.
AI-Focused Acquisition
Analog Devices announced it will acquire Empower Semiconductor for $1.5 billion in cash, a deal expected to close in the second half of calendar 2026, subject to customary conditions including U.S. antitrust review. Empower specializes in silicon capacitors and integrated voltage regulators, technologies critical for efficient power delivery in AI data centers. The acquisition aligns with Analog Devices' strategy to expand its presence in the AI ecosystem, as data centers increasingly require advanced power management solutions alongside graphics processors.
CEO Vincent Roche noted that energy remains "the most persistent constraint" for scaling next-generation systems. Empower CEO Tim Phillips described AI power delivery as "the hardest problem," adding that the company's technology aims to address the power bottleneck limiting AI throughput.
Market Context and Outlook
Analog Devices provided an upbeat forecast for fiscal Q3, projecting revenue of $3.9 billion, plus or minus $100 million, well above the $3.62 billion analysts had anticipated. The company guided adjusted EPS in the range of $3.15 to $3.45, with a midpoint of $3.30. The positive outlook comes as chip stocks have rallied this year, with investors increasingly focused on AI-related demand for analog components used in power and signal processing roles. Analog Devices shares have gained approximately 53% year-to-date, though they traded relatively flat following the earnings release, pulling back from an earlier gain on the acquisition news.
However, risks remain. The market may be pricing AI demand into all chip categories too quickly, and the Empower deal requires regulatory approval and successful integration. A slowdown in AI infrastructure spending or weaker guidance from key customers like Nvidia could impact the premium investors currently assign to analog chip growth.
