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Analog Devices Forecasts Strong Sales, But Auto Segment Tariff Boost Raises Sustainability Questions

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Analog Devices (ADI) on Thursday projected third-quarter revenue of $2.75 billion (± $100 million), beating Wall Street estimates of $2.62 billion, according to LSEG data. However, investor concern over tariff-driven demand in the automotive segment led to a 5% dip in shares after the announcement.

The chipmaker cited high-single-digit “pull-in” demand from automakers looking to stockpile semiconductors ahead of U.S. tariff changes, contributing to a 24% year-on-year jump in automotive sales, which reached $849.5 million for the May quarter. Yet, Analog Devices warned that auto revenue is expected to decline sequentially in the third quarter, triggering concerns about the durability of the rebound.

“While it’s difficult to delineate what was pull-in versus normal, our estimate for pull-in upside is in the high-single digit range,” said an ADI executive during the earnings call.

Broader Trends in Analog Chip Demand

The report follows a broader industry trend, with Texas Instruments last month also forecasting above-consensus revenue, signaling a revival in analog chip demand after quarters of inventory correction. Analysts believe restocking activity is now underway.

“Inventory had been really drawn down, so now we are seeing a restocking,” said Daiwa analyst Lou Miscioscia.

Despite the strong headline numbers, Stifel analyst Tore Svanberg noted investor concern around the temporary nature of auto demand driven by tariff policy rather than organic growth.

Consumer Segment Surges

ADI also reported a 30% jump in sales in its consumer segment, fueled by a rebound in personal electronics demand. According to Canalys data, global PC shipments rose 9.4% in Q1 2025 as manufacturers accelerated deliveries ahead of expected tariff hikes.

For Q3, Analog Devices forecast adjusted earnings per share of $1.92 (± $0.10), also ahead of consensus.

Lenovo Q4 Profit Plunges 64%, Misses Forecasts Amid Tariff Blow

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Lenovo, the world’s largest PC maker, reported a 64% year-on-year plunge in fourth-quarter net profit, falling far short of analysts’ estimates and triggering a sharp 5.4% drop in its share price on Thursday.

The company blamed the profit collapse largely on a fair value loss on warrants and the unexpected imposition of 20% tariffs on Chinese imports by U.S. President Donald Trump in March, targeting fentanyl-related goods but affecting broader categories.

“The 20% tariffs announced in March were implemented suddenly and left us no time to prepare. It had a significant impact on our numbers in the last quarter – it’s not a small number,” CEO Yang Yuanqing said during an earnings call.

Key Financial Results (Jan–Mar Quarter):

  • Net Profit:
    $90 million, vs. $225.8 million expected (LSEG consensus)
    ↓ 64% YoY

  • Revenue:
    $15.72 billion,
    ↑ 23% YoY, exceeding analyst forecast of $15.6 billion

Business Unit Highlights:

  • Infrastructure Solutions Group (ISG):
    Revenue ↑ 64% YoY, driven by server demand

  • Solutions and Services Group (SSG):
    Revenue ↑ 22%, reflecting strong enterprise cloud software sales

  • Personal Computing (PC):
    Continued global leadership but margin pressure remains amid tariff uncertainty

Tariff Impact and Strategy:

Yang confirmed that Lenovo may raise product prices if tariffs persist. He emphasized that the company’s 30 manufacturing facilities across more than 10 countries provide flexibility to adjust operations and mitigate future trade risks.

Although many U.S.-China tariffs imposed since April were rolled back, the 20% fentanyl-related levy remains, continuing to strain Chinese tech firms like Lenovo.

Market Reaction:

  • Lenovo stock:
    ↓ 5.4%, vs. Hang Seng index decline of 1.3%