Analog Devices Posts Record $4.02 Billion Quarter as Data Center Demand Leads Growth

Analog Devices reported record fiscal third-quarter revenue of $4.02 billion, up 40% from a year earlier, as the semiconductor maker said growth was led by data center and industrial demand. The quarter ended Aug. 1, 2026, and also produced a sharp increase in profitability, with net income reaching $1.34 billion from $518.5 million in the year-earlier period.

Diluted earnings per share rose to $2.74 from $1.04. The revenue result also exceeded the range Analog Devices had provided three months earlier, when it forecast third-quarter sales of $3.9 billion plus or minus $100 million. The final figure of $4.022 billion came in slightly above the top of that range.

Growth was broad across the company’s reported end markets. Industrial revenue rose 53% year over year to $1.97 billion, communications revenue climbed 84% to $654.5 million, automotive increased 16% to $998.2 million, and consumer revenue rose 6% to $397.2 million. In its third-quarter results, Analog Devices specifically identified Data Center and Industrial as the areas leading the year-over-year revenue increase.

Data center strength adds to a broader semiconductor recovery

Analog Devices does not report data center as a separate line item in its end-market revenue table, so the company’s statement that data center led growth should not be read as a standalone revenue figure for that market. Instead, the quarterly results show the acceleration through the reported communications and industrial businesses, where demand tied to infrastructure and higher-value analog products contributed to the overall expansion.

The communications business posted the fastest percentage growth among the four reported end markets. Its $654.5 million of revenue was up from $354.8 million a year earlier and also above the $554.7 million recorded in the second quarter. Industrial remained by far the largest end market, accounting for about 49% of quarterly revenue. Its sales increased to $1.97 billion from $1.29 billion a year earlier.

Automotive contributed roughly one-quarter of total revenue and returned to double-digit year-over-year growth, while consumer remained the smallest of the four businesses. The breadth of those gains matters because Analog Devices entered the fiscal year still working through a cyclical correction in parts of the analog semiconductor market. The third-quarter figures indicate that the recovery is no longer confined to a single customer group or product category.

The year-to-date numbers reinforce that pattern. Through the first nine months of fiscal 2026, Analog Devices generated $10.81 billion of revenue, up 36% from the comparable period. Industrial revenue was up 50% over that span, communications rose 72%, automotive increased 9%, and consumer grew 18%. Those results give the company a much larger revenue base heading into the final quarter of its fiscal year.

Higher sales translate into much stronger margins and cash flow

The increase in revenue produced a larger improvement in operating profit. GAAP operating income nearly doubled to $1.61 billion from $818 million, while operating margin expanded to 40.1% from 28.4%. Gross margin rose to 67.3% from 62.1%, a gain of 520 basis points.

On the company’s adjusted basis, gross margin was 72.5% and operating margin reached 50.0%, compared with 68.2% and 42.2%, respectively, a year earlier. Adjusted diluted EPS increased 68% to $3.45 from $2.05. Analog Devices uses adjusted measures to exclude items including acquisition-related charges, certain restructuring expenses and other specified costs, so the GAAP figures remain the direct accounting measure while the adjusted results provide management’s view of underlying operating performance.

Cash generation was also strong. Operating cash flow totaled $1.60 billion during the quarter and free cash flow was $1.46 billion. Over the trailing 12 months, operating cash flow reached $5.55 billion and free cash flow was $4.94 billion, equal to about 40% and 36% of revenue, respectively.

Analog Devices returned about $1.69 billion to shareholders during the quarter. That included $1.16 billion of share repurchases and $535 million of dividends. The company ended the period with about $2.17 billion in cash and cash equivalents, and its diluted share count was lower than at the start of the fiscal year, reflecting the effect of ongoing repurchases.

The board also declared a quarterly cash dividend of $1.10 per outstanding common share. The dividend is payable Sept. 15, 2026, to shareholders of record at the close of business on Sept. 1.

Record fourth-quarter guidance extends the momentum

Management expects the expansion to continue into the fiscal fourth quarter. Analog Devices forecast revenue of $4.3 billion, plus or minus $100 million, which the company described as a record outlook. At the midpoint, that would represent another sequential increase from the third quarter’s $4.02 billion.

The company expects GAAP operating margin of 42.6%, plus or minus 150 basis points, and adjusted operating margin of 52.0%, plus or minus 100 basis points. Reported diluted EPS is projected at $3.14, plus or minus $0.15, while adjusted diluted EPS is expected to be $3.86, plus or minus $0.15.

The guidance is stronger than the outlook Analog Devices issued for the third quarter in May, when it was targeting $3.9 billion of revenue at the midpoint, a 39.0% GAAP operating margin and adjusted EPS of $3.30. The third-quarter results ultimately came in above those revenue and earnings targets, giving management a higher base from which to set expectations for the final quarter.

For investors, the next test is whether the demand that pushed data center and industrial growth to the front of the third-quarter story can sustain both the revenue level and the margin structure embedded in that fourth-quarter forecast. Analog Devices has already set a record quarterly revenue mark, and its new guidance calls for another step higher before fiscal 2026 closes.