- Analog Devices forecast third-quarter revenue above Wall Street expectations on Wednesday, helped by a rise in demand for its industrial chips after a prolonged slump, sending its shares up more than 8%.
- The upbeat forecast signals that the chipmaker’s clients, working through existing inventory, are placing new orders amid signs of an easing economy.
- “We believe inventory rationalisation across our broad customer base is stabilising, clearing a path for us to return to sequential growth in the third quarter,” CEO Vincent Roche said, adding that the company is at the beginning of a cyclical recovery.
Analog Devices anticipates third-quarter revenue surpassing Wall Street’s expectations, citing increased demand for its industrial chips following a prolonged downturn. This optimistic outlook suggests that the company’s customers are replenishing orders as the economy shows signs of improvement. CEO Vincent Roche noted the stabilisation of inventory across their customer base, paving the way for sequential growth in the upcoming quarter and marking the start of a cyclical recovery.
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Revenue soars due to strong chip demand
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 also touted its artificial intelligence efforts on a post-earnings conference call 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.
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Strong Q3 revenue despite automotive sector Challenges
Analog Devices reported automotive revenue of $658.2 million, falling short of estimates amid a slowdown in electric vehicle purchases, leading automakers to reduce spending on new chips. The company anticipates third quarter adjusted earnings per share of $1.50, give or take 10 cents, surpassing estimates of $1.34 per share. Adjusted profit for the second quarter was $1.40 per share, outperforming estimates of $1.26 per share.
