Aug 19, 2026 earnings call — Data center and energy driving record quarter
Revenue was $4.02 billion, ADI's first $4 billion quarter, up 40% year over year.
Revenue $4.0B (est $3.9B) · EPS $3.45 (est $3.34)
Key quotes
"Now for the rest of my remarks, today, I will focus on how we are helping customers meet an unprecedented and still accelerating demand for AI infrastructure and energy systems."
"Based on current design wins and customer commitments, our OCS revenue is poised to approximately double this year and we are targeting a similar level of growth in 2027."
"EPS finished at the high end of our outlook for a record $3.45 up 12% sequentially and 68% year over year."
Analyst Q&A 8
Drivers of higher gross margin
Q (Harlan Sur · JPMorgan): Analyst asked whether mix and volume are the main drivers of the roughly 100+ basis point gross margin step-up in October, or if additional price increases beyond earlier actions also contributed.
A: Management said they expect a gross margin increase of about a 150-bps to about 74% driven by favorable mix, higher fixed cost absorption from higher revenue, and their price adjustment. They warned a seasonal shutdown in the first quarter will drag margins and said some price actions are not fully captured in Q4, so Q1 will include a full quarter of shipments and trailing contract impacts.
"This is driven by favorable mix Higher fixed cost absorption, obviously, following the higher revenue and our price adjustment." — Richard C. Puccio Jr.
Outlook and drivers for fiscal 2027
Q (Vivek Arya · BofA): Analyst asked how much recent top-line acceleration is secular vs cyclical vs pricing, whether the Q4 outlook implies ~20% fiscal 2027 growth, and if any constraints or more operating leverage remain if top line grows 20%.
A: Management said ADI is a clear beneficiary of the defense and AI supercycles and that aerospace/defense and data center are about 30% of ADI. They pointed to consumer and automotive content and Maxon synergies (about $700 million this year and expecting $1 billion plus in 2027), said inventories are intentionally placed with hybrid manufacturing, and that customers are still running lean so there is room on both cyclical and secular fronts. They cautioned macro risks but said they expect a brisk growth year in 2027.
"We are clearly a beneficiary of the defense and the AI supercycles, which I think will persist for many, many years to come." — Vincent T. Roche (CEO·CHAIR)
Data center growth for comms segment
Q (Stacy Rasgon · Bernstein): Analyst asked whether the comms segment, now ~80% data center, should be expected to grow around 100% year-over-year into 2027, and asked for near-term segment color into Q4.
A: Management gave near-term segment outlook at the midpoint: industrial up high single digits, communications led by data center up about 10%, consumer up high single digits, and automotive up low single digits. They framed those as the expected end-market moves into Q4.
"So, basically, at the midpoint of our outlook, you know, we are expecting industrial to be up high single digits Communications lead the growth, obviously, led by data center up about 10%, consumer up high single digits, and automotive to be up low single digits." — Richard C. Puccio Jr.
Long-term growth of analog industry
Q (Tore Svanberg · Stifel): Analyst asked if the analog industry's underlying growth is shifting up because of AI infrastructure and future physical AI, both from units and pricing.
A: Management said analog can plausibly be in double-digit compounded growth for several years, citing data center demand and increasing sophistication and pricing of solutions. They referenced prior expectations of 5%–7% but said they are contemplating higher growth in the out years.
"I think it is possible for the analog business to be in the double digit zone compounded for several years to come." — Vincent T. Roche (CEO·CHAIR)
How today differs from late-90s cycle
Q (Evercore): Analyst asked Vincent to compare today's secular dynamics to the late 1990s internet/telecom cycle and why analog could revert to a 5–7% trend.
A: Management said today's industry has far more intelligence built into IT, with more edge and intelligent edge, which increases the SAM and TAM for analog. They said ADI's portfolio is broader and deeper now, providing optionality and resilience, and argued the pervasiveness and 'gravity field' of AI make this cycle different.
"What I am seeing now mean, if you look at the industry in the intervening period of time, more and more intelligence has been brought into the world of information technology." — Vincent T. Roche (CEO·CHAIR)
ATE opportunity within AI exposure
Q (Jeff): Analyst asked how to frame the opportunity for ATE within ADI's AI exposure and whether management could size ATE's contribution.
A: Management said ATE plus data center make up 20% of ADI and that they have strong design activity and pipeline across ATE, data center, power, and optical. They declined to give forward growth numbers but said the 20% area has a multiyear strong growth tailwind backed by design activity, backlog, pipeline, and bookings momentum.
"At a high level, I mean, that 20% of ADI has got a really strong growth tailwind behind us, and we feel like it is multiyear." — Richard C. Puccio Jr.
Supply, capacity, and constraints
Q (Matthew Prisco · Cantor): Analyst asked how to think about ADI's supply capabilities as revenue rises, when capacity additions would be needed, and whether any supply-chain constraints or pressure points exist.
A: Management said they are executing well on supply: delivering above seasonal growth for nine straight quarters and guiding to a tenth, building inventory, expanding internal capacity, installing new tools, and getting more wafers externally. They said lead times have started to extend industry-wide but they are managing them, their book-to-bill is above 1, they are getting longer visibility from customers, and they are scenario planning for sustained growth including hybrid manufacturing and potential further capacity additions.
"We continue to install new tools in available spaces as we are and we are also getting more wafers externally." — Richard C. Puccio Jr.
Maintaining high gross-margin level
Q (Joshua Buchalter · TD Cowen): Analyst asked whether the roughly 74% gross-margin level can be held through the cycle and how management prioritizes revenue growth versus margins long term.
A: Management said they can continue to maintain roughly a 74% gross margin while balancing growth investments, though some investments may pressure margins. They noted benefits from higher factory utilizations, limited additional margin from more utilization, potential upside from mix shifts (industrial at 49% now), and that inflationary pressures will continue to be monitored.
"I do think as a previously mentioned, Joshua, we can continue to grow, let's say, continue to maintain that sort of roughly 74% level." — Richard C. Puccio Jr.