Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Analog Devices forecasts robust quarterly revenue on chip market recovery

Published 05/22/2024, 07:05 AM
Updated 05/22/2024, 01:10 PM
© Reuters. FILE PHOTO: Analog Devices' logo is pictured on a smartphone in this illustration taken, December 4, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
ADI
-

(Reuters) -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 rationalization across our broad customer base is stabilizing, 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.

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 (NASDAQ:ADI) 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.

The company's results follow a strong forecast from chipmaker Texas Instruments (NASDAQ:TXN), fanning optimism for a rise in analog chip demand.

Analog Devices reported revenue of $2.16 billion in the second quarter ended May 4, beating the average analysts' estimate of $2.11 billion.

The revenue for the company's industrial segment came in at $1.01 billion, higher than analysts' expectations of $952.2 million, driven by strong performances in aerospace and defense.

Automotive revenue of $658.2 million missed estimates of $666.5 million as the electric vehicle industry grapples with slowing purchases, prompting automakers to withhold spending on new chips.

© Reuters. FILE PHOTO: Analog Devices' logo is pictured on a smartphone in this illustration taken, December 4, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

The Wilmington, Massachusetts-based company expects third-quarter adjusted earnings per share of $1.50, plus or minus 10 cents, compared with estimates of $1.34 per share.

Adjusted profit for the second quarter came in at $1.40 per share, compared with estimates of $1.26 per share.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.