What changed
$ADI — AVOID 📊 | 6 MONTHS THESIS
🧭 Conviction: MED
🎯 FQ2 FY2026 (ends May) | reported May 20 | Rev $3.6B | EPS $3.09 vs $2.91 🟢 | Margin 38.1%
💡 Consensus extrapolates continued double-digit revenue growth and 38%+ operating margins. I see peak cyclical demand, with revenue growth likely to decelerate and margins facing normalizing headwinds. The beat (6.2% EPS) was modest and already in the price.
🏢 Business Quality: 8/10
📊 Valuation: rich — trailing P/E 31.3x, implied EV/EBITDA ~35x (annualized run-rate), both well above 5-year historical ranges and sector peers.
🔮 Catalyst: Next quarterly earnings (est. August 2026)
⚖️ Avoid ADI at 31x trailing P/E; valuation already prices in peak growth, and risk/reward is unfavorable with limited upside.