Detailed Narrative
Record quarter driven by industrial and data center
Q2 FY26 revenue was a record $3.62B, up 15% sequentially and 37% YoY, finishing above the high end of guidance, with growth led by industrial and data center. Industrial represented 50% of revenue and grew 20% sequentially and 56% YoY, with every industrial business up both sequentially and YoY, led by aerospace & defense, ATE, ETM and the broad market. Non-GAAP EPS was a record $3.09, up 26% sequentially and 67% YoY. Management characterized the industrial upturn as a broad-based, high-growth cycle compounded by secular investments.
Industrial cyclical-plus-secular thesis
Beyond ATE and aerospace & defense, ADI's industrial markets — automation, electronic test & measurement (ETM), sustainable energy, healthcare and broad market — collectively grew more than 40% in the first half of fiscal 2026. Management argued these businesses remain well below prior-cycle highs with lean channel inventories, combining secular content growth with cyclical recovery. Automation is benefiting from onshoring and robotics content; energy from grid electrification and battery/energy-storage demand; and healthcare from clinical digitalization and wearable outpatient monitoring, with double-digit revenue growth.
Data center and communications momentum
Communications was 15% of revenue, up 22% sequentially and 79% YoY. Data center now accounts for more than 75% of communications revenue and grew more than 90% YoY, fueled roughly equally by ADI's optical and power portfolios, both with strong orders. The wireless business grew more than 35% YoY. Management expects communications to be its fastest sequential grower in Q3 (up low-to-mid teens) and data center to keep increasing, positioning it as a key AI-infrastructure beneficiary.
Automotive strength and China pickup
Automotive was 24% of revenue, up 8% sequentially and 2% YoY — a record quarter driven by content and share gains in next-gen ADAS and infotainment (GMSL, functionally safe power, A2B). A material pickup in China late in the quarter drove much of the upside, arriving sooner than the expected second-half strength; China still declined QoQ while Europe and Japan set records. BMS for EVs returned to YoY growth for the first time in two years. Management cited record auto bookings, positive book-to-bill, lean customer inventories, and expects L3 ADAS in some China vehicles by year-end.
Manufacturing capacity and supply resilience
Management emphasized its dynamic hybrid manufacturing model, having more than doubled internal capacity versus pre-COVID and added geographic optionality externally. It believes it has capacity to support up to the $20B revenue tied to its 2030 vision. Lead times are in good shape and the demand book is increasing; the main watch item is the steepness of the industry-wide demand ramp heading into 2027. Memory and other supply choke points are forcing product choices, most affecting consumer customers.
Empower Semiconductor acquisition
ADI announced a planned acquisition of Empower Semiconductor, pending regulatory approval, to complete its grid-to-core power platform. Empower brings proprietary integrated voltage regulator (IVR) technology and silicon capacitors enabling true vertical power delivery — cutting external components, shrinking power footprint by up to 4x, and reducing data-center compute power consumption by an estimated 10-15%. Management framed it as filling a portfolio gap quickly to move closer to the XPU/GPU/CPU core, expanding TAM in the AI-accelerator space. Revenue at close will be immaterial, with a significant ramp expected in 2027 and design-ins already in train.