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Analog Devices is trading nicely following its impressive Q1 (Jan) report this morning and its announcement of an 11% dividend increase. Q1 EPS was a nice bounce back after a very narrow beat in Q4 (Oct). The stock had run around 40% since the Q4 report/guidance, which made us a bit nervous heading into this print given elevated sentiment and the risk of a pullback on any misstep. However, ADI delivered across the board.

• Q1 revenue grew 30.4% yr/yr to $3.16 bln, marking its first 30+% growth quarter in more than three years.
• Q2 (Apr) guidance featured big upside on both EPS and revenue, with management calling for a new high watermark for ADI supported by cyclical and secular tailwinds.
• Bookings growth continued in Q1, driven by broad strength in Industrial and record orders in the Data Center segment.
• Industrial (47% of Q1 revs) increased 38% yr/yr to $1.49 bln, accelerating from +34% in Q4 and +23% in Q3. Automotive (25% of revs) rose 8% yr/yr to $794.4 mln, slowing from +19% growth in Q4.
• Communications (15%) surged 63% yr/yr to $477 mln, up sharply from +37% in Q4, with data center revenue growing approximately 50% in FY25 and accelerating further in Q1. Wireless posted double-digit growth for a third consecutive quarter, aided by cyclical improvements.
• Consumer (13%) climbed 27% yr/yr to $399.8 mln, a notable acceleration from +7% growth in Q4.
• Q1 adjusted operating margin expanded to 45.5% from 40.5% a year ago, representing a significant profitability improvement. We think the margin result is adding to today's move in the stock.

Briefing.com Analyst Insight:

ADI delivered an impressive combination of accelerating revenue growth, expanding margins, and upbeat forward guidance. The strength in Industrial and Communications, particularly in data center and AI-related infrastructure, reinforces the view that ADI is benefiting from both cyclical recovery and durable secular demand drivers. We were cautious given the stock's 40% run since the prior report, but the magnitude of the beat and guide — along with meaningful margin expansion — helps justify the recent move. While the macro and geopolitical backdrop remains fluid, demand indicators are trending favorably, and ADI appears well positioned to continue outperforming if execution remains solid.