Analog Devices, Inc.

ADI has outgrown the chip cycle: AI and defense demand drove its first $4 billion quarter, and management now targets double-digit growth instead of the mid-single digits it long modelled. Profit has to keep pace while its factories are already full. How much of ADI's revenue depends on AI infrastructure spending?

• AI hardware now drives the company, not the chip cycle.

  Data center and chip-test equipment are now a fifth of revenue, and data center alone doubled year over year. Management raised its long-term view for the analog market to double-digit growth, which holds only if the AI build keeps going. How much of ADI's data center growth comes from power versus optical?

• Industrial is carrying the recovery and has room left to run.

  Industrial is half of revenue, growing 53% year over year, led by aerospace and defense and chip-test. Management says the rest of industrial sits about 20% below its last peak, so orders can keep climbing without any new demand appearing. Which of ADI's industrial sub-segments is furthest below its last peak?

• Margins are near a ceiling, and serving more demand costs more.

  Gross margin is guided to 74%, but management sees little more to gain from running factories harder — past this point, extra volume comes from outside factories that take their own cut, so profit grows more slowly than sales.