Why Analog Devices Stock Fell by More Than 4% Today

Semiconductor company Analog Devices (NASDAQ: ADI) published its latest quarterly earnings report Thursday morning, but despite its estimates-beating performance, investors sold out of the stock.

They left it with a more than 4% drop in share price on the day, on concerns that a lingering tariff war could badly affect its fundamentals. That decline compared unfavorably to the S&P 500's (SNPINDEX: ^GSPC) marginal slide.

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Powerful double-digit growth

For its fiscal second quarter of 2025, Analog Devices' revenue came in at $2.64 billion, 22% higher year over year. Headline net income grew far more robustly, increasing by almost 89% to just under $570 million. On a non-GAAP (generally accepted accounting principles) adjusted, per-share basis, the company netted a profit of $1.85, up from the $1.40 it booked in the same period of fiscal 2024.

Image source: Getty Images.

Analysts were expecting lower numbers. Their consensus projection for revenue was $2.51 billion, and that for adjusted profitability was $1.70 per share.

In its earnings release, Analog Devices attributed the double-digit gains to both internal and external factors. It quoted CEO Vincent Roche as saying, "Against a backdrop of global trade volatility, our performance reflects the ongoing cyclical recovery, and the strength and resiliency of our business model."

Tariff-related demand

During the quarter, Analog Devices took in nearly $850 million for its products used in current-generation automobile systems.

This critical part of its business grew by 24% year over year; however, the company said this was due in part to heightened demand in anticipation of the Trump administration's tariffs. The company's personal electronics business was also affected similarly. That's concerning, as it's very likely such demand isn't sustainable, no matter how the tariff war plays out.

Nevertheless, Analog Devices is still anticipating growth. It proffered guidance for its current (third) fiscal quarter, stating that revenue should be $2.65 billion to $2.85 billion, and adjusted net income $1.82 to $2.02 per share. On average, analysts are estimating $2.62 billion on the top line, and $1.82 per share for adjusted profitability.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.