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Can Analog Devices Really Hit $400 This Year?
Author: Thomas Hughes. Article Published: 2/18/2026.
In Brief
- Analog Devices has a strengthening tailwind from end-market normalization and data center demand.
- Guidance is of "wow" quality and is likely to be cautious.
- Analysts are lifting price targets, pointing to fresh highs this year.
Analog Devices' (NASDAQ: ADI) share price could easily top $400 this year, driven by a rapidly swelling outlook that the fiscal Q1 2026 earnings report strengthened.
End-market normalization is becoming a robust tailwind as AI drives datacenter and broader semiconductor demand. For ADI investors, that implies sustained, accelerating growth, wider margins and improved cash flow to support healthy capital returns.
Analog Devices Reports 4th Quarter of Accelerating Growth: Guidance Wows
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Analog Devices delivered a strong quarter, with growth across all end markets. The company reported $3.16 billion in net revenue, a 30.6% year-over-year (YOY) increase that outpaced consensus by 130 basis points. Segmentally, Industrial and Communications, which houses the data-center business, led with gains of 38% and 63%, respectively.
Automotive was the weakest, up only 8%, but it is expected to strengthen over time. Consumer grew by an impressive 27%.
Margin news was notable. The company widened its GAAP margin by a quadruple-digit basis-point amount, while adjusted metrics also improved meaningfully. Adjusted gross margin improved by 240 basis points, and adjusted operating margin improved by 500 basis points, helping drive a 52% increase in adjusted earnings and robust free cash flow.
Operating cash flow improved by 43% on a trailing 12-month basis, while free cash flow rose 39% to more than $4.5 billion.
The strength in free cash flow is critical because it enables reinvestment and capital returns while maintaining a healthy balance sheet.
Guidance was the market-moving factor. The company's forecast for Q2 revenue and earnings was significantly above consensus at the low end of the range, implying at least 500 basis points of outperformance at the low end and more than 1,000 basis points at the high end. Given the results and clear momentum, the company will likely perform at the high end of its range, if not outperform its guidance.
Analog Devices Capital Return Is Dialing in on Dividend Aristocrat Status
Analog Devices' capital return is noteworthy for several reasons, including a long history of dividend increases. The company announced its 22nd consecutive annual increase alongside its fiscal Q1 release, sustaining a low-double-digit distribution CAGR and putting it on track to become a Dividend Aristocrat by decade's end. (Note that the company's fiscal reporting period does not align with the calendar year.)
Inclusion in the Dividend Aristocrats index would likely increase buy-and-hold ownership and reduce volatility. Until then, the dividend appears safe at less than 50% of the earnings outlook and yields a market-average 1.15% as of the pre-release close.
Share repurchases are equally meaningful. Q1 buybacks reduced the share count by an average of 1.4% YOY in the quarter and are expected to continue at a similar pace. The balance sheet shows no red flags: cash and current assets increased, long-term debt declined, and equity remained steady. Leverage is low, with cash up 16% year-to-date; long-term debt is roughly 2.5x the cash balance and about 0.2x equity.
Analysts Trends Drive Analog Devices' Market Sentiment
The initial analysts' response to Analog Devices' FQ1 report has been bullish, continuing an existing trend. Price-target increases from Stifel Nicolaus and Cantor Fitzgerald push the stock toward the high end of the target range; Cantor's $400 target aligns with the current high, implying roughly 18% upside from the pre-release high that could be reached before the second half.
MarketBeat data shows strong coverage with 29 analysts tracked, up from a year ago. Ratings have firmed at Moderate Buy and price targets are trending higher.
Institutional activity is also supportive. While institutional selling increased over the past 12 months, quarterly flows remained net positive throughout the year and into early 2026.
In the first six weeks, purchases exceeded $1.50 for every $1 of sales — a tailwind for price action given the 87% institutional ownership rate.
Short sellers do not appear to be a material risk. Short interest is low, below 2%, and declining as of early February.
Analog Devices Rockets Higher on Strong Results
Analog Devices' price action surged more than 5% in premarket trading following the release. The move reflects a stronger-than-expected quarter and guidance, suggesting the rally could continue. The primary risk is profit-taking, which could cap near-term gains; in that case, ADI may consolidate at new highs or correct before pushing to fresh highs.
How to Read Applied Materials Earnings: What Signals Move the Stock?
Authored by Sam Quirke. Publication Date: 2/12/2026.
Quick Look
- Applied Materials is up 26% year to date and roughly 170% since last April, and has been consistently printing new highs since November.
- This week’s earnings are highly anticipated, with expectations elevated amid a broader shift in tech sentiment.
- If the company can deliver, the rally should continue, but if it stumbles, any dip would likely be a buying opportunity.
Having already gained a reputation as one of the strongest performers of the year, Applied Materials Inc (NASDAQ: AMAT) now faces its first big test of the year. Shares are up 26% year to date and have rallied roughly 170% since last April, hitting all-time highs on what feels like a near-weekly basis since November.
The move has been underpinned by consistent earnings outperformance, strong positioning in the semiconductor manufacturing space, and growing confidence on Wall Street in management’s ability to execute. But sentiment across tech has shifted in recent weeks, so its fiscal Q1 earnings report is likely to be scrutinized more closely than usual.
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Investors have again questioned rising levels of capital expenditure, and company-specific headwinds, such as exposure to China, have returned to the conversation. This means Applied Materials will not only be one of the most closely watched stocks of the week, but will likely remain a hot topic for the rest of the quarter. The question investors are asking is whether the gains can continue beyond the Feb. 12 report and how they should position themselves for the fallout. Let’s take a closer look.
Why the Rally Has Room to Run
Regardless of how the fiscal Q1 report lands, the broader backdrop remains supportive. The global semiconductor market is expanding, driven by AI, high-performance computing, and increasing chip complexity. As demand rises, so does the need for advanced manufacturing equipment, placing Applied Materials squarely in the sweet spot of the cycle.
Beyond cyclical tailwinds, there’s a structural story as well. As chip fabrication grows more complex, Applied Materials’ recurring service and parts business has become increasingly valuable. That recurring revenue adds resilience and margin stability—a dynamic investors have leaned into over the past year.
Recent analyst sentiment reinforces this confidence. The teams at RBC, B. Riley Financial, Citigroup, and UBS have all reiterated Buy ratings in February, with price targets stretching as high as $405. That implies roughly 20% more upside even after the strong run this year. Critically, these updates were issued in the days before the report—risky timing, but a sign of elevated analyst confidence in Applied Materials’ prospects.
The Bar Is High, But History Favors the Bulls
Expectations are understandably elevated heading into Thursday’s report, with Morgan Stanley recently saying it expects the company to top estimates. While that bullishness is encouraging, it also raises the stakes.
When a stock has rallied this hard and trades near highs, even a solid report can trigger profit-taking if the numbers and forward guidance aren’t spectacular. Add the broader shift in tech sentiment, and volatility increases.
However, Applied Materials has built a track record of overachieving, and consistent execution has been the foundation of the rally. Even if earnings merely meet expectations or guidance is a little soft, the long-term thesis remains intact. A knee-jerk selloff would more likely be viewed as an opportunity than a warning sign.
How to Play the Fallout
The setup into earnings is straightforward. If Applied Materials delivers another strong beat and maintains a confident outlook, the stock should be able to extend its multi-month rally. Fresh highs would likely attract momentum buyers and reinforce its leadership status.
If the report disappoints and shares pull back sharply, investors should watch closely rather than panic. With structural demand intact and analyst support in place, any earnings-driven dip could present a compelling entry point. A reset in expectations—particularly if unaccompanied by a meaningful change in long-term guidance—may simply create a better risk/reward setup. Either way, this is a stock to keep on your radar.
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