FPA Crescent Fund, advised by First Pacific Advisors, LP on Analog Devices, Inc.
Thesis
Analog Devices is a leading analog and mixed-signal semiconductor supplier that benefited from strong demand across AI infrastructure, industrial automation and communications equipment. During the quarter the company reported record results, including 37 percent year-over-year revenue growth, expanding margins and record bookings across several end markets. The announced acquisition of Empower Semiconductor and guidance for continued growth into the second half of the year further strengthened investor expectations. FPA's broader posture is to retain some exposure to high-quality beneficiaries of compute demand while recognizing that valuations and the capital cycle have become less forgiving.
“During the quarter, shares rose after ADI reported record quarterly results, including 37% year-over-year revenue growth, expanding margins, and management pointing to record bookings across several end markets.”
Key risks
- A moderation in AI-related capital spending could reduce demand and pressure valuation