Buy ADI on the Weakness

研报英文原文证据摘录

Buy ADI on the Weakness

confidence for the rest of the

year, supported by Auto customers running at pretty lean inventory levels today.

 In Communications, Data Center exposure now accounts for >75% of revs and grew >90% Y/Y in the April Q.

Strength was balanced between Optical and Power, with wireless also up >35% Y/Y. Based on commentary, we

believe DC revs were about $430M in the Q (~50/50 Optical/Power) vs. ~$320M last Q (up mid-30%s Q/Q).

 For AI-related revenues, we estimate close to ~$700M in the Q (split ~>$250M ATE, ~$215M Optical, ~$215M

Power), compared to ~$530M last Q (split ~$210M ATE, ~$160M Optical, ~$160M Power).

 Following up on the Empower acquisition announced yesterday for an all-cash transition of $1.5B, mgmt.

highlighted that this was the final piece needed to deliver true vertical power delivery to customers (gaining

technologies across IVR and silicon capacitors). This deal is complementary to the current product offering, fills

gap in ADI’s portfolio (where time was of the essence in filling), expands ADI’s TAM within the AI accelerator

space, and will be further discussed when the deal closes in 2HCY26.

 Gross Margins came in better-than-expected and up Q/Q on better mix, higher utilization rates, and pricing

tailwinds. GMs were guided down 50bps in 2Q due to the one-time channel repricing in the April Q (a 50bps

headwind), though will benefit from better mix (Comms + Industrial strength). Note, utilization rates are less of

a driver from here, given where factories are running today (we think close to normal 85-90% range).

 Inventories on the balance sheet increased $81M Q/Q as the company builds die bank and finished goods to

support growth, with days decreasing to 168 (vs. 171 last Q). Channel inventories declined Q/Q, but remain