ADI
Analog Devices
Semiconductors
★ Quality 22/100Price today
$362.25
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What this business is made of
Where does the value come from?
5-year cycle
Money made year by year
This business has cycles — good years and bad years. That's why we don't use just the last year.
We use the average of those 5 years as the base for the math — not the good year, not the bad year. That way the value reflects what the company makes steadily.
The business
ADI translates the real world into digital: penny chip, irreplaceable system.
Analog Devices makes analog and mixed-signal chips: converters, power management, sensors. They translate the real world —temperature, pressure, sound— into digital data. Sells ~75,000 products to more than 100,000 industrial, automotive, and communications customers. FY2025: $11.0B in revenue, 61% gross margin.
Their chips cost pennies but control systems worth thousands. Switching suppliers means redesigning and recertifying the entire product, so customers stay 10-20 years. The portfolio was built over four decades of analog engineering, where talent is scarce and can't be replicated with money.
Revenue history
From $7.3B to $11.0B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $11.0B · FY2025
Of every $100 in sales, $79 goes to costs and operations; $21 is left as net profit (21% margin).
Catalysts and risks
Industrial and automotive cycle recovery after the 2024 destocking — FY2025 already bounced back to $11.0B from $9.4B.
Growing analog content per electric vehicle: every EV carries more battery and power management chips.
Full synergies from the Maxim integration, targeting operating margins sustained above 40%.
Cyclical business: industrial demand can drop 20% in a quarter without warning.
$8.1B debt against $2.5B cash — an acquisition legacy that weighs if rates rise.
No monopoly: Texas Instruments competes head-on and has more manufacturing scale.
Charlie's note
“Paying 12x for a business with 61% gross margin and customers who take a decade to leave is not demanding; the 11% growth is modest, but the customer's forced loyalty makes up for the wait. The quality here justifies the multiple without apology.”
Analysis · June 2026
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