Click to view the earnings moves in ADI
Strong Earnings Send ADI Higher—But What Comes Next?
Analog Devices (ADI) impressed the Street with a strong fourth quarter and upbeat fiscal 2025 results, driving its shares up 2.7% today. The latest surge comes on robust revenue, healthy margins, and continued confidence in both cyclical and secular growth—but is this just the beginning of a bigger move, or should traders temper expectations?
Today’s Earnings Snapshot: Growth on All Fronts
The numbers speak for themselves. ADI reported Q4 revenue of $3.08 billion—up 26% from last year—powered by broad-based gains, especially in communications and industrial end-markets. For the full fiscal year, revenue jumped 17% to $11.0 billion, while free cash flow reached an impressive $4.3 billion, or 39% of revenue. Nearly all (96%) of that free cash flow was returned to shareholders via buybacks and dividends.
| Key Metric | Q4 2025 | Q4 2024 | % Change |
|---|---|---|---|
| Revenue | $3.08B | $2.44B | 26% |
| Gross Margin | $1.94B | $1.42B | 37% |
| Diluted EPS | $1.60 | $0.96 | 67% |
| Operating Margin | 30.7% | 23.3% | +740 bps |
On the options front, traders expected a bigger move of ±5.1%, so today's 2.7% rise came in softer than anticipated. That could be a clue: historically, ADI has tended to move less dramatically than options pricing might suggest.
Historical Stock Moves: Does the Past Signal What’s Ahead?
If you’re trying to gauge what typically happens to ADI around earnings, the data tells a fascinating story:
| Stock Performance | Earnings Move | Open Gap | Open to High | Open to Low | Open to Close |
|---|---|---|---|---|---|
| Average Return | +2.2% | +0.8% | +3.2% | -2.3% | +1.4% |
| % of Moves Up | 66.7% | 58.3% | 66.7% | ||
| % of Moves Down | 33.3% | 41.7% | 33.3% |
On average, ADI rallies 2.2% on earnings days—outperforming today’s result, with about two-thirds of past reports producing upside. There’s also a modest tendency to keep drifting higher into the close (+1.4% on average), and the average push to the daily high is +3.2%, suggesting bulls have historically found reasons to bid the stock even after the open.
Curious for even more stats? Explore ADI’s historical stock performance around earnings here.
Measuring the Moves: How Wild Does It Get?
If you’re wondering how much ADI can move on earnings day, take a look at these absolute performance metrics:
| Stock Performance | Earnings Move | Open Gap | Open to High | Open to Low | Open to Close |
|---|---|---|---|---|---|
| Absolute Average Return | 4.9% | 3.7% | 3.2% | 2.3% | 3.4% |
| Max Absolute Return | 10.9% | 8.7% | 7.8% | 7.0% | 7.8% |
| Min Absolute Return | 0.5% | 0.3% | 0.6% | 0.0% | 0.9% |
Big surprises are possible: over the last dozen quarters, the wildest single-day move hit 10.9%, though most earnings events tend to stay under the 5% mark.
What Happens After Earnings?
ADI’s day-of-earnings bounce often sparks a lot of chatter, but history shows the follow-through is less exciting. Over the days and weeks after results, the stock’s average returns slip into the red:
| Stock Performance | 1 Day After Earnings | 2 Days After Earnings | 3 Days After Earnings | 1 Week After Earnings | 2 Weeks After Earnings |
|---|---|---|---|---|---|
| Average Return | -0.8% | +0.1% | 0.0% | -0.4% | -0.4% |
| % of Moves Up | 27.3% | 54.5% | 54.5% | 54.5% | 45.5% |
| % of Moves Down | 72.7% | 45.5% | 45.5% | 45.5% | 54.5% |
The biggest red flag? The day after earnings, ADI actually falls -0.8% on average, with the stock drifting lower 72.7% of the time. Momentum doesn’t seem to stick: even two weeks out, the average return is negative.
Options Traders Make Their Move
With ADI in focus today, the options market saw active trading—though the overall options volume (3,423 contracts) landed on the lighter side compared to the size of the earnings event. The most traded single-leg option was:
| Attribute | Value |
|---|---|
| Option Contract | 19-Dec-25 260 C |
| Volume | 1,043 |
| VWAP price | 2.00 |
| Open interest | 3,205 |
| Yesterday's closing price | 2.65 |
This contract (a December 2025 $260 call) attracted significant action. However, given the modest move in the stock and the recent dip in the option's price, it raises a question: is this new positioning or just profit taking? Only time will tell how this big bet plays out.
Key Takeaway: Is This Earnings Pop Built to Last?
While ADI delivered stellar numbers and rewarded shareholders yet again, history says short-term gains after earnings don’t always stick. The 2.7% move up today is right in line with typical post-earnings rallies, and the next few sessions could be choppier than bullish headlines suggest.
For traders, it pays to look beyond the headline number—digging into historical moves, average follow-through, and option market sentiment can reveal what’s lurking beneath the surface. Will ADI break the trend this time, or does a fade lie ahead?
Explore deeper historical performance statistics here before making your next move.
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