A Look At Analog Devices (ADI) Valuation After AI Fueled Semiconductor Rally And Fed Optimism
Analog Devices (ADI) moved higher as part of a broad semiconductor rally, with investors responding to growing enthusiasm around artificial intelligence and the possibility of more accommodative Federal Reserve policy supporting risk assets.
See our latest analysis for Analog Devices.
The recent move to a US$299.16 share price comes on top of a 32.77% 90 day share price return and a 37.95% 1 year total shareholder return, hinting at building momentum as AI enthusiasm meets a lower P/E and P/B than many peers, even alongside recent insider share sales.
If this AI driven rally has your attention, it could be a good moment to scan high growth tech and AI stocks that are catching investors' eyes beyond Analog Devices.
With ADI trading around US$299.16 after a strong run and still carrying lower P/E and P/B ratios than many semiconductor peers, is the market leaving a value gap open here or already baking in years of future growth?
Most Popular Narrative: 6.1% Overvalued
With Analog Devices last closing at US$299.16 against a narrative fair value of US$282.03, the current setup appears rich and depends on ambitious earnings power assumptions.
Updated models point to best in class sales growth this year, driven by a combination of cyclical recovery, secular content gains, and product differentiation. This is used to support higher long term EPS trajectories and is cited as justification for higher price targets.
Curious what kind of revenue ramp, margin profile, and future earnings multiple are reflected in that fair value? The underlying assumptions are clearly optimistic. The full narrative lays them out.
Result: Fair Value of $282.03 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, expectations around higher margins and AI or autos demand could unravel if competition intensifies, or if geopolitical and trade tensions disrupt ADI’s key end markets.
Find out about the key risks to this Analog Devices narrative.
Build Your Own Analog Devices Narrative
If you do not share this view or prefer to stress test the assumptions yourself, you can build a custom thesis in just a few minutes by starting with Do it your way.
A great starting point for your Analog Devices research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
Looking for more investment ideas?
If Analog Devices has sparked your interest, do not stop here; widen your watchlist with focused stock ideas that match how you like to invest.
- Zero in on small companies with specific characteristics using these 3544 penny stocks with strong financials that highlight businesses combining lower share prices with solid financial markers.
- Target the AI theme more directly by scanning these 28 AI penny stocks that group companies tied to artificial intelligence developments across different parts of the market.
- Look for potential price and cash flow mismatches through these 881 undervalued stocks based on cash flows that spotlight stocks where market expectations and fundamentals may not fully align.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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