By Mackenzie Tatananni

Shares of Analog Devices lost ground Thursday, reversing a surge that came as the semiconductor company posted earnings that topped Wall Street's expectations and shared a rosy forecast for the current quarter.

Adjusted earnings for the fiscal second quarter came in at $1.85 a share beating the consensus call for $1.70 among analysts tracked by FactSet. The company reported $2.64 billion in revenue, surpassing Wall Street's $2.51 billion consensus estimate.

Shares fell 4.1% to $212.98 as commentary from management raised concern about the outlook. The S&P 500 and tech-heavy Nasdaq Composite were up 0.4% and 0.8%, respectively.

Much about the report was positive. Analog Devices cited "double-digit year-over-year growth across all end markets." The latest results also represented sequential growth, topping earnings of $1.63 a share and revenue of $2.42 billion in the first quarter.

"Against a backdrop of global trade volatility, our performance reflects the ongoing cyclical recovery, and the strength and resiliency of our business model," CEO and Chair Vincent Roche said in a statement.

Management told investors to expect third-quarter adjusted earnings in the range of $1.82 to $2.02 a share and revenue of $2.75 billion, plus or minus $100 million. Analysts polled by FactSet had forecast earnings of $1.80 a share on revenue of $2.61 billion.

The company's chief financial officer, Richard Puccio, noted that second-quarter bookings accelerated across all regions and end markets in the quarter. The company operates in North America, Europe, Africa, and the Middle East.

"The improving demand signals we saw throughout our fiscal Q2 support our outlook for continued growth in Q3 and reinforce our view that we are in a cyclical upturn," Puccio said.

But on the earnings call, Puccio noted that wireline and data- center revenue, representing two-thirds of the company's communications business, drove growth in the quarter "as AI build-outs continue to increase demand for our power and optical control products." Wireless revenue, meanwhile, declined on a year-over-year basis.

With regard to forecasts, Puccio said management expected to see strength in the company's industrial and consumer business, while automotive would decline "after a very strong quarter."

He indicated that President Donald Trump's April 2 tariff announcement triggered a flood of orders as customers scrambled to get ahead of the tariffs, causing vehicle-related orders to peak.

"Unsurprisingly, buying behavior was a bit choppier as we saw some increased activity around the tariff announcements," Pucci said. "This was short-lived and orders have returned to more normalized levels."

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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May 22, 2025 15:15 ET (19:15 GMT)

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