Analog Devices (NASDAQ: ADI), one of the world's leading analog semiconductor companies, released its financial results for the third quarter of fiscal year 2025 (ending August 2, 2025). The company posted revenue of $2.88 billion, representing 9% quarter-over-quarter growth and 25% year-over-year growth, surpassing its own guidance high-end expectations.

CEO and Chairman Vincent Roche highlighted that despite ongoing geopolitical uncertainties and trade fluctuations, demand for ADI products remains strong. The company’s focus on innovation in the intelligent physical edge and its diversified business model allow it to navigate market challenges while continuing to create long-term value for shareholders.

Business Segment Performance

1. Industrial Segment – Accelerating Recovery
Industrial remains ADI’s largest and most profitable business, contributing $1.285 billion (45% of revenue). Revenue grew 12% QoQ and 23% YoY, with strong performance across all sub-industries and regions. Aerospace and defense revenue hit a record high, while AI-driven investment boosted automated test equipment growth.

2. Automotive Segment – Short-Term Dip, Long-Term Strength
Automotive accounted for 30% of revenue, down slightly by 1% QoQ, but still up 22% YoY. ADI’s leadership in connectivity and functional safety power solutions continues to drive growth. The company expects record-high automotive revenue for full-year 2025, supported by ADAS and infotainment demand.

3. Communication Segment – AI Drives Expansion
Communication contributed 13% of revenue, growing 18% QoQ and 40% YoY. Two-thirds came from wired and data center businesses, fueled by AI-related demand, while wireless also delivered double-digit growth.

4. Consumer Segment – Steady Momentum
Consumer represented 13% of revenue, up 16% QoQ and 21% YoY, marking the fourth consecutive quarter of double-digit growth. Demand remained strong in smartphones, gaming devices, audio, and wearables.

Financial Highlights

* Gross margin (Non-GAAP): 69.2%, up YoY but slightly down QoQ due to lower-than-expected utilization.

* Operating margin: 42.2%, up 100 bps both QoQ and YoY.

* EPS: $2.05, up 30% YoY and above guidance.

* Cash flow: $4.2 billion operating cash flow and $3.7 billion free cash flow in the past 12 months.

* Capex: $500 million, expected to remain 4–6% of annual revenue.

Inventory increased $72 million to support recovery, with days of inventory at 160. ADI also expanded its internal wafer fabs, doubling capacity for industrial applications to strengthen supply resilience.

Market Outlook

For Q4 FY2025, ADI guides revenue of $3.0 billion ± $100 million. Growth is expected in industrial, communication, and consumer markets, while automotive may decline slightly.

China remains a key growth driver. ADI noted that China continues to lead the company’s recovery, and management is optimistic about the next 3–5 years in the region. However, the company remains cautious about ongoing tariff uncertainties.

Industry Comparison: TI Shows Similar Trends

Texas Instruments (TI) also reported strong recovery, with Q2 2025 revenue of $4.45 billion, up 9% QoQ and 16% YoY. Both ADI and TI point to broad-based industrial recovery as the main driver, signaling a new growth cycle for the analog semiconductor industry.

Conclusion

ADI delivered a robust Q3 FY2025 performance, led by industrial recovery and strong communication demand. With expanding cash flow, investments in internal fabs, and resilient end markets, the company is positioned for continued growth in FY2025 and beyond.

The broader analog semiconductor market is entering a new cycle of growth, with industrial applications and AI-driven demand as the key accelerators.