Goldman Sachs Begins Coverage of Analog Devices (ADI) Stock, Gives Buy

Analog Devices, Inc. (NASDAQ:ADI) is one of the Most Promising AI Stocks to Buy Now. Goldman Sachs initiated coverage of the company’s stock with a “Buy” rating and a price objective of $285, as reported by The Fly. The firm initiated the US analog and radio frequency semiconductor sector with a relatively bullish outlook, noting the cyclical opportunities it expects. As per the analyst, the analog industry is expected to move towards trendline shipments over the upcoming 12-18 months. Furthermore, the firm remains most bullish on companies that are shipping furthest below trend and the ones that have managed supply chains well.

Goldman Sachs analyst James Schneider exhibited confidence and believes that, despite uncertain near-term macroeconomic conditions, Analog Devices, Inc. (NASDAQ:ADI) can continue to deliver strong growth, margin generation, and FCF generation relative to its peers. This view is aided by Analog Devices, Inc. (NASDAQ:ADI)’s solid financial health.

Furthermore, the analyst noted the company’s competitive differentiation and opines that this key factor can enable it to maintain and potentially enhance its market presence, primarily as the China market is becoming increasingly competitive. Analog Devices, Inc. (NASDAQ:ADI)’s commitment to innovation and customer success enables it to continue to extend its leadership at the increasingly AI-driven Intelligent Edge.

Analog Devices, Inc. (NASDAQ:ADI) supports AI by offering high-precision sensors, signal processing, as well as low-power chips, allowing data collection as well as edge computing for AI applications.

Aristotle Atlantic Partners, LLC, an investment advisor, released its Q1 2025 investor letter. Here is what the fund said:

“Analog Devices, Inc. (NASDAQ:ADI) is a global semiconductor leader dedicated to solving customers’ most complex engineering challenges. The company delivers innovations that connect technology to human breakthroughs and play a critical role at the intersection of the physical and digital worlds by providing the building blocks to sense, measure, interpret, connect and power. Analog designs, manufactures, tests and markets a broad portfolio of solutions. These solutions include integrated circuits, software and subsystems that leverage high-performance analog, mixed-signal and digital signal processing technologies. Its comprehensive product portfolio, deep domain expertise and advanced manufacturing span high-performance precision and high-speed mixed-signal, power management and processing technologies, including data converters, amplifiers, power management, radio frequency, integrated circuits, edge processors and other sensors. The company’s customers include original equipment manufacturers and customers that build electronic subsystems for integration into larger systems.

We see the company’s analog products providing exposure to high-growth trends, including automotive electrification and driver assistance systems, factory intelligence and automation, the Intelligent Edge, Internet of Things device proliferation and sustainable energy. We expect the company to return excess free cash flow, benefiting shareholders.”

While we acknowledge the potential of ADI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now

Disclosure: None. This article is originally published at Insider Monkey.