ADI's Communications Segment Surges 26% in FY25: What's Next?

Analog Devices’ ADI communications segment recovered strongly in fiscal 2025 after two years of slowdown. The segment started showing signs of resilience from the second quarter of fiscal 2025, where its revenues grew 36% year over year, followed by 41.2% and 36.7% growth in the third and fourth quarters of fiscal 2025, respectively.

The communications segment was primarily driven by growth in the wireline sub-market from data center infrastructure expansion in support of AI applications. With customers’ inventory correction largely behind and demand for high-throughput connectivity and power solutions rising, the company remains confident in continued growth through 2026.

As AI and high-performance computing (HPC) adoption accelerates, global demand is increasing for communications that deliver higher speeds, lower power consumption, and greater bandwidth efficiency across data, video, voice, and machine-to-machine applications.

Growth will also be supported by traction in private industrial networks and other secure communications markets. ADI’s communications portfolio remains strategically critical with deep domain expertise and decades of leadership in high-performance analog and mixed-signal ICs. ADI is positioned to capture opportunities brought by AI and HPC.

ADI’s communications segment was the fastest growing among all its segments, growing 26% in fiscal 2025, with wireless revenues being flat year over year. ADI expects this segment to lead the charge in 2026.

How Competitors Fare Against Analog Devices

Analog Devices competes with Texas Instruments TXN and Broadcom AVGO in the Communications segment. Texas Instruments competes with ADI in analog/mixed-signal, RF front-ends, power amp/driver ICs, ADCs/DACs in infrastructure and wireless systems.

Broadcom is strong in networking, data center, broadband, Wi-Fi, Ethernet PHYs and switches. In the communications segment, Broadcom mainly competes with its high-speed connectivity, optical/wireline networking equipment, and cable or broadband IC portfolio.

Despite strong competition from Texas Instruments and Broadcom, Analog Devices has enough scope to grow in the communications space as new 5G technology is being introduced.

ADI’s Price Performance, Valuation and Estimates

Shares of ADI have gained 31.7% in the past six months compared with the Semiconductor - Analog and Mixed industry’s growth of 22.9%.

ADI 6-Month Performance Chart

From a valuation standpoint, ADI trades at a forward price-to-sales ratio of 11.32X, higher than the industry’s average of 8.86X.

ADI Forward 12-Month (P/S) Valuation Chart

The Zacks Consensus Estimate for ADI’s fiscal 2026 and 2027 earnings implies year-over-year growth of 28.5% and 14.4%, respectively. The consensus estimate for fiscal 2026 and 2027 has been revised upward in the past 30 days.

ADI currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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