What Happened?
Shares of manufacturer of analog chips Analog Devices (NASDAQ: ADI) fell 2.7% in the morning session after a broader sell-off in the semiconductor industry was triggered by a weak revenue forecast from competitor Texas Instruments.
The downturn was felt across the sector after Texas Instruments issued a December-quarter revenue expectation of $4.4 billion, which was below the Wall Street consensus of $4.5 billion. This news sparked concerns about weakening demand for chips, leading to a decline in semiconductor stocks. The Philadelphia Semiconductor Index, a key benchmark for the industry, fell by 0.66% during the prior session's trading. Other major chipmakers, including Micron Technology, Broadcom, and Advanced Micro Devices, also saw their shares close lower. Separately, Analog Devices announced an agreement to sell its manufacturing facility in Penang, Malaysia, to ASE Technology, but the market's attention was focused on the negative sentiment sweeping the industry.
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What Is The Market Telling Us
Analog Devices’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock gained 4.3% on the news that investor fears eased as President Trump softened his tone regarding trade relations with China. Following a sharp selloff late last week fueled by threats of an additional 100% tariff on Chinese goods, the president's more conciliatory weekend message that "it will all be fine" sparked a broad market rally. The semiconductor sector, which is particularly sensitive to international trade policies due to its global supply chains, was among the biggest beneficiaries of the improved sentiment. Chipmakers had posted significant declines during the previous week amid escalating tariff concerns. The reversal in tone helped these stocks recover a substantial portion of their recent losses as investors bought back into the sector, relieved that trade tensions might not escalate further.
Analog Devices is up 13.8% since the beginning of the year, and at $240.68 per share, it is trading close to its 52-week high of $255.63 from August 2025. Investors who bought $1,000 worth of Analog Devices’s shares 5 years ago would now be looking at an investment worth $1,928.
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