ADI
Analog Devices, Inc.
Technology · Semiconductors · United States · Stock
Score Breakdown
Scored for Aggressive Growth profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- ADI earned a total model score of 67.4/100 and a Medium risk rating, supported by strong growth and momentum scores reflecting double-digit revenue expansion and consistently accelerating quarterly results.
- Profitability was a positive contributor, with a 26.6% operating margin and 20.6% net margin in FY2025, though the modest 4.7% return on assets tempered the profitability score.
- The dividend factor provided moderate support given a consistent four-year growth streak in dividends per share, but the 84.9% payout ratio limited the score's upside.
Why Not Higher
- The theme factor scored zero despite ADI's Semiconductors classification, meaning the macro theme assignment provided no scoring benefit and held back the composite score.
- The financial health factor scored below the midpoint of its range, and the elevated dividend payout ratio of 84.9% alongside a relatively low 4.7% return on assets introduced constraints that prevented a higher overall score.
Data Confidence
9 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $9,427,157,000 to FY2025's $11,019,707,000, a gain of 16.9%, while net income expanded even faster, rising 38.7% from FY2024's $1,635,273,000 to FY2025's $2,267,342,000.
The model rewarded both the double-digit top-line expansion and the accelerating bottom-line growth, with net income outpacing revenue growth by more than two to one, signaling improving operational leverage.
In FY2025, ADI posted an operating margin of 26.6%, a net margin of 20.6%, and a return on assets of 4.7%.
The model recognized the combination of a substantial operating margin and a healthy net margin as indicators of efficient cost management, while the relatively modest return on assets tempered the score, likely reflecting the asset-heavy nature of the semiconductor business.
Filing evidence currently available does not support a more specific explanation for this factor.
Revenue accelerated across the last four quarters, rising from $2,880,348,000 in 2025Q3 to $3,076,117,000 in 2025Q4, $3,160,263,000 in 2026Q1, and $3,623,465,000 in 2026Q2. Operating income followed the same upward trajectory, moving from $818,028,000 in 2025Q3 to $945,211,000, $997,026,000, and $1,379,680,000 in subsequent quarters, while net income climbed from $518,518,000 in 2025Q3 to $787,738,000, $830,826,000, and $1,176,350,000 over the same span.
The model rewarded the consistent and accelerating improvement across all three income metrics quarter over quarter, with the most recent quarter showing particularly sharp gains in both revenue and profitability.
ADI has grown its dividends per share each year from $2.97 in FY2022 to $3.34 in FY2023, $3.62 in FY2024, and $3.89 in FY2025, though the FY2025 dividend payout ratio stood at 84.9% of net income.
The model credited the consistent multi-year dividend growth streak, but the elevated payout ratio of 84.9% in FY2025 signals limited headroom for further increases without corresponding earnings growth, which likely constrained the score from reaching the top range.
ADI is assigned to the Semiconductors macro theme.
Although ADI carries the Semiconductors theme assignment, this assignment did not translate into a positive score under the model's current methodology for this factor.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Analog Devices, Inc. (ADI) delivered strong fiscal year results with revenue rising 16.9% to $11,019,707,000 and net income surging 38.7% to $2,267,342,000 in FY2025, demonstrating meaningful operational leverage. Profitability metrics were solid, with a 26.6% operating margin and 20.6% net margin, though a relatively modest 4.7% return on assets reflects the capital-intensive nature of the semiconductor industry. Quarterly momentum has been consistently accelerating, with revenue climbing from $2,880,348,000 in 2025Q3 to $3,623,465,000 in 2026Q2, accompanied by sharp gains in operating and net income. ADI also maintains a multi-year dividend growth streak, though an 84.9% payout ratio in FY2025 leaves limited room for further increases absent continued earnings growth.
Plain English
ADI is a semiconductor company that has been growing its sales and profits quickly, with earnings growing much faster than revenue, and its quarterly results keep getting better each period — but it pays out most of its profits as dividends, which could be a constraint if growth slows.
Bull Case vs. Bear Case
Bull Case
- Revenue grew 16.9% year-over-year to over $11 billion in FY2025, while net income grew even faster at 38.7%, signaling that ADI is becoming more profitable as it scales.
- Quarterly momentum is accelerating sharply, with revenue reaching $3,623,465,000 and net income hitting $1,176,350,000 in 2026Q2 — the strongest quarter in the trailing four-quarter window.
- ADI has grown its dividend per share every year from $2.97 in FY2022 to $3.89 in FY2025, reflecting a consistent commitment to returning capital to shareholders.
Bear Case
- The FY2025 dividend payout ratio of 84.9% is elevated, leaving little financial flexibility to grow the dividend further unless earnings continue to expand at a strong pace.
- Return on assets of only 4.7% in FY2025 suggests that ADI's large asset base — totaling $47,992,712,000 — is not generating proportionally high returns, which is a common challenge in asset-heavy semiconductor businesses.
- The theme factor contributed zero points to the model score despite ADI's clear semiconductor classification, indicating that the macro theme assignment did not provide a scoring tailwind under the current methodology.
What Could Change the Picture
Bullish Triggers
- If ADI's earnings growth continues to outpace revenue growth as seen in FY2025, the elevated payout ratio could normalize, making the dividend more sustainable and potentially allowing for further increases.
- Continued acceleration in quarterly operating income — which jumped from $818,028,000 in 2025Q3 to $1,379,680,000 in 2026Q2 — would further validate the operational leverage story and strengthen the investment case.
Bearish Triggers
- A slowdown in the quarterly revenue or income trajectory from the current accelerating trend would undermine the momentum thesis that has been a key driver of the model score.
- If net income growth decelerates while the payout ratio remains near 84.9%, ADI could face pressure to cut or freeze its dividend, reversing the multi-year growth streak.
Risk Profile
Medium RiskADI's total asset base of $47,992,712,000 reflects the capital-intensive nature of the semiconductor industry, which contributes to the Medium risk rating. While quarterly momentum has been strongly positive and accelerating through 2026Q2, any reversal in that trend could meaningfully impact the investment thesis.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.