Earnings Recap — Q3 FY2026
CY Q3 2026 · Reported August 19, 2026 · Beat 7 of last 7 quarters
Analog Devices, Inc. reported Q3 FY2026 revenue of $4.02B, a beat of 2.6% against consensus, and EPS of $3.45, a beat of 3.3%.
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ADI's record quarter — data center revenue growing more than 100% year over year and management more than doubling its 2030 data center and energy SAM — is a direct read on the AI buildout's power-constrained reality. ADI's grid-to-chip position spanning grid monitoring, energy storage, rack power, and optical control makes it a beneficiary as data center capacity shifts to gigawatt-scale and 800V DC power distribution. As clusters scale to more power-hungry loads, ADI's analog content per watt is rising, reinforcing its role as a critical link across the AI power chain.
ADI reported Q3 FY2026 revenue of $4.02 billion, up 11% sequentially and 40% year over year — the first $4 billion quarter in company history. Growth was broad-based: Industrial (49% of revenue) grew 53% year over year, Automotive (25%) grew 16%, Communications (16%) grew 84%, and Consumer (10%) grew 6%. Data center, now 80% of communications revenue, grew more than 100% year over year in both optical and power. Gross margin was 72.5%, operating margin 50%, and EPS reached a record $3.45, up 68% year over year. Trailing-twelve-month free cash flow was a record $4.9 billion, 36% of revenue, with more than 100% returned to shareholders.
Management guided Q4 FY2026 revenue to $4.3 billion plus or minus $100 million, operating margin to 52% plus or minus 100 basis points at the midpoint, and adjusted EPS to $3.86 plus or minus $0.15 — another sequential step-up above the record just reported. CEO Vincent Roche expects a brisk growth year in 2027, citing the defense and AI supercycles, with aerospace and defense, ATE, and data center now roughly 30% of ADI and poised for further content and share gains. On data center, management sees an extended runway to at least 2030 for strong double-digit growth, with OCS revenue set to roughly double this year and again in 2027, and the 2030 data center and energy SAM now more than doubled versus a year ago. Gross margin is guided up roughly 150 basis points to about 74% in Q4, driven by favorable mix, higher fixed-cost absorption, and price actions, though a seasonal Q1 shutdown and persistent inflation are flagged as near-term drags. On capacity, management says ADI is well positioned for near- and medium-term demand, continuing to install internal tools and secure additional external wafers, with book-to-bill above 1.
“third quarter revenue, margin and earnings all exceeded our outlook with growth across all of our end markets. Led by data center and industrial, propelling us to the first $4 billion quarter in ADI's history”
on Record quarter
“The fact that data center capacity is now measured in gigawatts rather than flops and tops underscores 1 of the most defining challenges of the AI era. Power availability has become the primary constraint to further AI progress.”
on AI-era power constraint
“Revenue in the third quarter was $4.02 billion finishing above the high end of our outlook, and increasing 11% sequentially and 40% year over year.”
on Q3 results
On the implied ~73.5% October gross margin, are favorable mix and volume driving most of the 100-plus-basis-point step-up, or are there additional price increases beyond the actions taken earlier in the year?
CFO Richard Puccio said Q4 gross margin is expected to increase roughly 150 basis points to about 74%, driven by favorable mix, higher fixed-cost absorption, and price adjustments, and noted the full extent of announced price actions is not yet captured in Q4.
On fiscal 2027, how much of the top-line acceleration is secular versus cyclical versus pricing, and is there more operating leverage left if the top line were to grow around 20%?
CEO Vincent Roche said ADI is a clear beneficiary of the defense and AI supercycles, with aerospace and defense, ATE, and data center now about 30% of the company, and expects roughly $700 million of Maxon synergies this year rising to $1 billion-plus in 2027, on top of a favorable pricing backdrop.
With data center now 80% of the communications segment, should the communications segment be growing close to 100% year over year into 2027?
CFO Richard Puccio guided Q4 end markets to industrial up high single digits, communications up about 10% led by data center, consumer up high single digits, and automotive up low single digits; CEO Vincent Roche added that data center is on pace to roughly double in 2026 with an extended runway to at least 2030 for strong double-digit growth.