아날로그 디바이스(ADI) 2026 회계연도 3분기 실적 발표: AI 성장에 힘입어 매출 40억 달러 돌파

핵심 요약

• 아날로그 디바이스(ADI)는 2026 회계연도 3분기 매출이 40억 2,000만 달러를 기록하며 분기 매출 최초로 40억 달러를 돌파했다고 발표했습니다. 매출은 전분기 대비 11%, 전년 동기 대비 40% 증가했습니다.
• 비GAAP 영업이익률은 전년 동기 대비 780bp 상승한 50%를 기록했으며, 조정 EPS는 68% 증가해 사상 최고치인 3.45달러를 기록했습니다.
• 통신 부문 매출은 전년 동기 대비 84% 증가했습니다. 데이터 센터가 해당 부문의 80%를 차지했으며, 광학 및 전력 매출 모두 100% 이상 성장했습니다.
• 산업용 부문 매출은 자동 시험 장비, 전자 시험 및 측정, 항공우주 및 방산, 자동화 부문이 성장을 이끌며 전년 동기 대비 53% 증가했습니다.
• 2026 회계연도 4분기에 대해 경영진은 매출 43억 달러(±1억 달러), 조정 EPS 3.86달러(±0.15달러)를 예상하고 있습니다.
• 경영진은 AI 인프라 지출, 새로운 전력 아키텍처, 아날로그 반도체 탑재량 증가를 반영해 ADI의 2030년 데이터 센터 및 에너지 시장 기회(전체 잠재시장)가 1년 전 추정치보다 2배 이상 늘어났다고 밝혔습니다.

주요 재무 데이터

ADI는 7월 7일 임파워 세미컨덕터를 인수하기 위해 현금 15억 달러를 지급했습니다. 순차입금 비율은 0.9를 기록했습니다.

가속화되는 수요에 맞춰 ADI가 전략적 다이 뱅크 용량을 확충함에 따라 재고는 전분기 대비 8,300만 달러 증가했습니다. 재고자산 회전일수는 156일로 감소했으며, 유통 채널 재고는 회사의 목표치인 6~7주 미만으로 떨어졌습니다.

사업 및 운영 실적

산업용

산업용 부문은 분기 매출의 49%를 차지했습니다. 매출은 모든 산업용 사업의 성장에 힘입어 전분기 대비 10%, 전년 동기 대비 53% 증가했습니다. 가장 크게 기여한 부문은 자동 시험 장비, 전자 시험 및 측정, 항공우주 및 방산, 자동화 등이었습니다.

차량용

차량용 부문은 매출의 25%를 차지했으며 전분기 대비 14%, 전년 동기 대비 16% 성장했습니다. 경영진은 차세대 운전자 보조, 인포테인먼트, 전기 파워트레인 시스템을 포함해 내연기관 및 전기차 전반에서의 반도체 탑재량 증가와 점유율 확대를 주요 배경으로 꼽았습니다.

통신 및 AI 데이터 센터

통신 부문은 매출의 16%를 차지하며 전분기 대비 18%, 전년 동기 대비 84% 증가했습니다. 현재 데이터 센터가 통신 매출의 80%를 차지하고 있으며, 광학 및 전력 매출 모두 전년 대비 2배 이상 증가했습니다.

ADI는 데이터 센터 시장 기회가 그리드에서 칩으로 이어지는 전력 체인 전반으로 확대되고 있다고 밝혔습니다. 성장 분야로는 그리드 모니터링, 에너지 저장, 광학 제어, 랙 전력, 800볼트 DC 배전, 프로세서 전력 공급, 실시간 텔레메트리 등이 포함됩니다.

현재 확보된 수주와 고객사 약정에 기반하여, 경영진은 광 회선 교환(OCS) 매출이 2026 회계연도에 약 2배로 증가하고 2027 회계연도에도 비슷한 성장을 이룰 것으로 전망하고 있습니다. 또한 회사 측은 데이터 센터와 자동 시험 장비를 합친 노출 비중(익스포저)이 전체 매출의 20%를 차지한다고 밝혔습니다.

임파워 세미컨덕터 인수를 통해 프로세서 패키지 내부로 전력을 직접 공급하는 수직 전력 공급(VPD) 역량이 강화되었습니다. ADI는 이러한 아키텍처를 통해 컴퓨팅 전력 소비와 온도를 약 10%~15% 줄일 수 있으며, 이는 1기가와트 규모 데이터 센터 기준 연간 약 3,000만 달러의 비용 절감 효과에 해당한다고 밝혔습니다.

소비자 가전

소비자 가전 부문은 매출의 10%를 차지했습니다. 매출은 전분기 대비 보합세를 보였으며 전년 동기 대비로는 6% 증가했습니다. 메모리 관련 난제에도 불구하고 스마트폰, 히어러블, 웨어러블 및 B2B 프로슈머 포트폴리오가 성장했습니다.

경영진 가이던스

경영진은 통신 부문이 전분기 대비 약 10% 성장하며 4분기 성장을 견인할 것으로 예상하고 있습니다. 산업용 부문은 한 자릿수 중후반 %, 소비자 가전은 한 자릿수 중후반 %, 차량용 부문은 한 자릿수 초반 % 증가할 것으로 전망됩니다.

질의응답 세션에서 경영진은 우호적인 제품 믹스, 고정비 흡수 효과 및 가격 정책에 힘입어 4분기 매출총이익률이 약 150bp 상승한 74% 수준을 기록할 것으로 전망된다고 말했습니다. 회사 측은 이 수준을 유지하는 것은 예상 매출과 제품 믹스에 달려 있다고 덧붙였습니다.

ADI는 2026 회계연도 설비투자(CapEx)가 매출의 4%~6%인 장기 목표 범위 내에 머물 것으로 예상합니다. 경영진은 또한 2027 회계연도에도 활발한 성장이 지속될 것으로 예상하지만, 공식적인 연간 가이던스는 제공하지 않았습니다.

리스크 및 주요 관전 포인트

• 경영진은 거시경제적 불확실성 요인으로 높아진 지정학적 리스크, 잠재적 금리 인상, 금융 시장 변동성을 언급했습니다.
• AI 설비투자(CapEx)의 둔화 또는 축소는 회사의 데이터 센터 성장 궤도에 영향을 미칠 수 있습니다.
• 인플레이션은 여전히 지속적인 비용 압박 요인입니다. ADI는 또한 계절적 요인에 따른 1분기 공장 셧다운이 매출총이익률에 부담을 줄 것으로 예상하고 있습니다.
• 수요 증가로 일부 반도체 산업의 리드 타임이 길어지기 시작했으나, 경영진은 ADI가 단기 및 중기 공급 요구사항에 충분히 잘 대응할 수 있는 입지를 갖추고 있다고 말했습니다.
• 지속적인 성장을 위해서는 추가적인 자체 생산 능력과 외부 웨이퍼 공급이 필요할 수 있습니다. ADI는 하이브리드 제조 네트워크를 통해 시나리오 계획을 진행하고 있습니다.

애널리스트 Q&A 하이라이트

매출총이익률 지속 가능성: 경영진은 매출과 제품 믹스가 뒷받침된다면 약 74%의 매출총이익률을 유지할 수 있다고 밝혔습니다. 공장 가동률로 인해 추가 상승 여력은 제한적이지만, 산업용 제품 비중이 높아지면 인플레이션과 성장 투자를 상쇄하는 데 도움이 될 수 있습니다.

2027 회계연도 성장 동력: ADI는 AI 데이터 센터, 자동 시험 장비, 항공우주 및 방산, 차량용 반도체 탑재량 증가, 소비자 가전 점유율 확대, 가격 정책, 광범위한 경기 순환적 회복을 꼽았습니다. 경영진은 광범위한 사업의 상당 부분이 여전히 과거 소비 수준을 밑돌고 있으며 고객사의 재고 축적이 본격적으로 시작되지 않았다고 덧붙였습니다.

장기 데이터 센터 전망: 경영진은 2027 회계연도의 구체적인 성장률 제시를 사양했으나, 적어도 2030년까지 데이터 센터의 견조한 두 자릿수 성장을 예상하고 있습니다. ADI의 에너지 사업은 현재 약 5억 달러의 매출을 올리고 있으며, 경영진은 2030년대 전까지 이 수치가 2배로 늘어날 것으로 기대하고 있습니다.

공급 능력: ADI는 9분기 연속으로 계절적 수준을 상회하는 성장을 달성했으며, 10번째 분기 역시 성장을 전망했습니다. 회사는 기존 시설에 장비를 도입하고, 더 많은 외부 웨이퍼를 조달하며, 다양한 공정 노드에 걸쳐 제조 파트너들과 공동 계획을 수립하고 있습니다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning, and welcome to the Analog Devices' Third Quarter Fiscal Year 2026 Earnings Conference Call, which is being audio webcast via telephone and over the web.

I'd now like to introduce your host for today's call, Mr. Jeff Ambrosi, Head of Investor Relations. Sir, the floor is yours.

Jeff Ambrosi

Thank you, Danny, and good morning, everybody. Thank you for joining our Third Quarter Fiscal 2026 Conference Call. Joining me today is ADI's CEO and Chair, Vincent Roche; and ADI's CFO, Richard Puccio.

For anyone who missed the release, you can find it at investor.analog.com, along with related financial schedules. The information we're about to discuss includes forward-looking statements, which are subject to certain risks and uncertainties, as further described in our earnings release, periodic reports and other materials filed with the SEC. Actual results could differ materially from the forward-looking information as these statements reflect our expectations only as of the date of this call. We undertake no obligation to update these statements, except as required by law.

References to grow margin, operating and nonoperating expenses, operating margin, tax rate, earnings per share and free cash flow in our comments today will be on a non-GAAP basis, which excludes special items. When comparing our results to our historical performance, special items are also excluded from prior periods. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures and additional information about our non-GAAP measures are included in today's earnings release. References to earnings per share are on a fully diluted basis.

And with that, I will turn the call over to ADI's CEO and Chair, Vincent Roche.

Vincent Roche

Thank you, Jeff, and a very good morning to you all. Well, as you've seen, third quarter revenue, profitability and margin earnings all exceeded our outlook with growth across all of our end markets, led by data center and industrial propelling us to the first $4 billion quarter in ADI's history. Demand for our solutions continues to grow supported by robust AI and defense spending, cyclical momentum and underlying secular content growth across our diversified end markets.

Through targeted R&D we continue to extend the limits of technology performance and accelerate the pace with which we are delivering more comprehensive solutions to our customers' toughest problems. In tandem, investments in our hybrid manufacturing network have enabled us to increase the agility and responsiveness of our supply chain and consistently capture above seasonal growth for more than 2 years.

Now for the rest of my remarks today, I'll focus on how we're helping customers meet unprecedented and still accelerating demand for AI infrastructure and energy systems. The fact that data center capacity is now measured in gigawatts rather than flops and tops underscores one of the most defining challenges of the AI era. Our availability has become the primary constraint to further AI progress. Solving this challenge requires more than simply adding more energy, however, it demands a group to chip system-level approach that encompasses both improving the availability and delivery of energy and extracting the maximum computing power from every watt delivered.

Now let me walk you through some of the key elements of our grid-to-chip strategy starting at the grid where the AI bottleneck begins. As electricity networks become more complex, visibility, efficiency and resilience are becoming critical challenges. Customers are turning to ADI's grid monitoring solutions to illuminate the flow of energy across the network, providing real-time insights into voltage, current, power quality and system health. And our higher-value solutions are helping utilities, energy operators and infrastructure providers to improve efficiency, reliability and utilization.

An increasingly essential part of the grid and one of the fastest-growing sectors is energy storage. Here, customers choose ADI's industry-leading battery management technology to help maximize usable energy, improve system efficiency, extend battery life, enhance safety and, of course, improved ROI. Standing and modernizing the traditional grid alone, however, is not enough to keep pace with the speed of AI infrastructure deployment. To accelerate time to power, hyperscalers are increasingly exploring dedicated microgrids which are opening up additional avenues of growth for ADI. We believe this trend of $100 million plus energy business, which began inflecting in 2025 and delivering accelerating growth this year also.

Importantly, our strong and growing positions across both energy and data center make us a more critical AI ecosystem player spanning the entire electricity value chain from generation, transmission and storage to distribution through rack power and ultimately, processor power delivery, essentially the vascular system of the data center.

Now once the grid mix contact with the data center, AI's extreme energy and information density requirements make ADI's deep expertise and innovation in high-performance power management, sensing and telemetry as well as optical connectivity even more critical. So let me start with our optical franchise as I begin to unpack for you how we're growing our data center business and opportunity by helping our customers resolve the tremendous challenges of energy and information density. When we think about the journey of data through the infrastructure, there are 2 critical pathways, the data path of electro optics and the control path, which guides, optimizes and ensures the integrity of the data path.

Our focus is on the control path where we've been setting and extending the industry's performance envelope for decades. Today, the complexity of efficiently moving data at ever higher speeds within and between RECs and across data center campuses is growing exponentially. Customers are increasingly relying on ADI to provide essential timing, power management, data conversion, monitoring and control capabilities that enable lasers and transceivers to operate with precision reliably, efficiently and at the necessary scale for AI workloads.

And as customers seek to further increase the amount of optical lanes, signaled bandwidth or both, to accelerate network speeds from 800 gig to 3.2 terabits per second. We believe that we're very well positioned to benefit threefold from unit growth in pluggables and coherent light modules increasing BOM content and greater share as these transitions unfold. As new architectures, such as optical circuit switching and co-packaged optics gained traction in next-generation large-scale AI clusters Complexity expands even further and our long-term opportunity continues to grow. Based on current design wins and customer commitments, our OCS revenue is poised to approximately double this year and we're targeting a similar level of growth in '27.

In the nascent CPO space, which we view as a semi-tender, the criticality of ADI's precision control technology further increases as thermal and serviceability challenges rise. So in short, the combination of market growth, expanding content, increasing share and differentiated value creation across data center optics reinforces our confidence that this segment will remain a strong growth vector for ADI over the coming years.

Now let me turn to our power franchise. The need for customers to convert and deliver precise increasing levels of power at the rack and compute layers efficiently and safely is driving continued broad-based growth across our portfolio. Customers are leveraging ADI's products and solutions to push for greater than 98% conversion efficiencies, multi-kilowatt power delivery with peak power levels up to 2x the rated load and comprehensive protection, telemetry and fault recording capabilities that enhance system reliability and maximize uptime.

To put just one of those differentiators in context, the 1% difference between 97% and 98% efficiency may not sound like very much, but a 97% conversion efficiency loses roughly 50% more energy through heat than a 98% solution. Over time, of course, that difference compounds in terms of the need for additional cooling infrastructure, stress on equipment and operating costs. And we believe our opportunity will continue to grow substantially as power density demands of AI clusters continue to increase. The industry's architectural transition toward 800-volt DC power distribution, for example, plays directly into ADI's power management expertise and portfolio.

And we're seeing a significant design and uptick for our protection and 800-volt to intermediate power conversion technologies, which can deliver 20 kilowatts of power at industry-leading power densities exceeding 2.5 kilowatts per cubic inch. And at the intermediate to core conversion layer, which is one of the fastest and largest growing analog opportunities in the AI era, our combination of advanced power conversion, intelligent system control and real-time telemetry is critical to achieving the necessary power density, efficiency and reliability requirements for next-generation processors to operate at 6,000 amps and sub 1 volt.

Our Empower acquisition further enhances ADI's vertical power story by enabling us to take power into the processor package itself. In large-scale AI deployments, these architectural advantages can reduce compute power consumption and temperature by approximately 10% to 15%, which equates to roughly $30 million in annual savings in a 1 gigawatt data center. As with optical, our power pipeline is growing rapidly, and the direction and rate of our R&D investments reflects our belief in the size of the SAM opportunity before us and our confidence that data center power can remain a strong growth vector for ADI over the coming years.

So in summary, we believe the architectural shifts underpinning the evolving AI era are increasing ADI's role as a critical partner across the-grid-to-chip ecosystem and driving extraordinary opportunity. Our current assessment is that our 2030 data center and energy set has more than doubled from what we had envisioned just 1 year ago. This dramatic expansion is not simply a function of increased AI infrastructure CapEx. It reflects the impact of new markets and architectures that require orders of magnitude more analog content delivered via higher-value solutions.

Now stepping back to frame this growth on the larger landscape of ADI's continued evolution, grid to chip is but 1 facet of the first generation of AI characterized by applications largely focused on data centers. The ATE growth we've recently spoke to on these calls is yet another facet. As great as the impact of Generation 1 AI has been so far for ADI. However, we continue to believe that the bigger prize may be in the second generation as AI extends its reach from the data center to the physical world in the form of pervasive robotics, digital health, autonomous mobility and so on and so forth. In this now emerging phase, AI must not only support higher level learning and analytics, but also real-time sensing, inference and responsiveness to complex real-world signals.

Our ability to tackle this challenge through our products and solutions and edge-based reasoning informed by deep physical intelligence will extend our AI value proposition across the entire addressable space. We're able to pursue this horizon of AI opportunity as a result of the tremendous optionality built into ADI's business model, which is designed to support both upside growth asymmetry as well as cyclical downside resiliency. This optionality is founded by leveraging our cutting-edge technology stack and domain expertise at the electrophysical interface as well as long-term partnerships with our customers. Our success in AI to date is the latest proof point, and I believe the best is yet to come.

And with that, I will hand it over to Rich.

질의응답

Stacy Rasgon

Thank you, Vince, and let me add my welcome to our third quarter earnings call. Revenue in the third quarter was $4.02 billion, finishing above the high end of our outlook and increasing 11% sequentially and 40% year-over-year. Growth was broad-based across markets and regions. Industrial, which represented 49% of our third quarter revenue finished up 10% sequentially and 53% year-over-year. We saw year-over-year growth across all our industrial businesses, led by ATE, electronic test and measurement, aerospace and defense and automation.

Automotive represented 25% of revenue, finishing up 14% sequentially and 16% year-over-year. Our higher content and share positions globally continue to result in growth well above SAAR. We are seeing diversified strength across customers and products in key secular growth areas, including next-gen AS and infotainment systems and also in electric powertrains.

Communications represented 16% of revenue, finishing up 18% sequentially and 84% year-over-year. Data Center, which now accounts for 80% of our communications revenue continued to accelerate with more than 100% year-over-year growth in both optical and power.

In Wireless, we delivered more than 25% year-over-year growth as we continue to execute against cyclical tailwinds.

Lastly, Consumer represented 10% of quarterly revenue, flat sequentially and up 6% year-over-year. Our diversified consumer business showed strong resilience despite memory-driven challenges. We achieved year-over-year growth across smartphones, hearables and wearables and saw accelerated growth in our B2B like Prosumer franchise.

Now on to the rest of the P&L. Third quarter gross margin was 72.5%, down 50 basis points sequentially and up 330 basis points on a year-over-year basis, driven by higher revenue, utilization and favorable mix. OpEx in the quarter was $907 million, resulting in an operating margin at the high end of our outlook or 50%, which is up 100 basis points sequentially and 780 basis points year-over-year driven by improved gross margin and execution discipline. Nonoperating expenses were $69 million, and the tax rate for the quarter was 13.1%. All told, EPS finished at the high end of our outlook for a record $3.45, up 12% sequentially and 68% year-over-year.

Now I'd like to highlight a few items from our balance sheet and cash flow statements. Cash and short-term investments decreased to $2.3 billion, driven by the successful closing of our Empower Semiconductor acquisition on July 7, where we paid $1.5 billion in an all-cash transaction. Our net leverage ratio now sits at 0.9.

We increased inventory $83 million sequentially as we continue to build strategic die bank to support accelerating demand. We exited fiscal Q3 with record balance sheet inventory and increased inventory at our distributors. Despite the increases, our days declined to 156 and channel weeks fell below our 6- to 7-week target. Over the trailing 12 months, operating cash flow and CapEx were $5.5 billion and $0.6 billion, respectively. We continue to expect fiscal '26 CapEx to be within our long-term model of 4% to 6% of revenue.

Free cash flow over the trailing 12 months was a record $4.9 billion or 36% of revenue. Over that same period, we returned more than 100% to shareholders through dividends and share repurchases. As a reminder, the durability and strength of our financial model allows us to target 100% free cash flow return over the long term, aiming to use 40% to 60% to support our annual dividend and the remainder for share count reduction.

Now moving on to our fourth quarter outlook. Revenue is expected to be $4.3 billion, plus or minus $100 million. Operating margin at the midpoint is expected to be 52%, plus or minus 100 basis points. We expect nonoperating expenses of approximately $80 million and a tax rate of 12% to 14%. Based on these inputs, adjusted EPS is expected to be $3.86 plus or minus $0.15.

In closing, our record results and outlook underscore our ability to capitalize on cyclical and secular tailwinds across the AI ecosystem, defense, core industrial and automotive markets. We will continue to balance execution discipline with strategic growth investments to navigate a dynamic macro and geopolitical environment while delivering on our attractive financial model.

With that, I'll give it back to Jeff for Q&A.

Jeff Ambrosi

Thank you, Rich. Now I'll get to our Q&A session. [Operator Instructions] With that, operator, can we have our first question, please?

Operator

[Operator Instructions] Our first question comes from Harlan Sur with JPMorgan.

Harlan Sur

Congratulations on the continued solid execution. On the strong operating margin guidance and therefore, strong implied gross margins, I'm sort of rolling up to about 73.5% gross margin by October, 100 basis points improvement your utilizations are already at high levels. You've talked about mix and volume as the primary drivers going forward. Are these 2 dynamics driving most of the 100 basis points plus step-up in gross margins in October? Or the team implementing more price increases beyond the actions that you took at the beginning of the year, and this is also maybe contributing to the strong gross margin profile as well?

Richard Puccio

Thanks for the question, Harlan. I'll take this one. So -- as we described for Q3, gross margin came in as expected. We are actually expecting a gross margin increase of about 150 bps to about 74%. And we're spot on, this is driven by favorable mix. higher fixed cost absorption, obviously, following the higher revenue and our price adjustment.

So if we look to sort of medium term, I'd remind you that we do have a seasonal shutdown coming up in our first quarter, which does create some drag on gross margin and are expecting more cost increases coming. Inflation is still a persistent factor.

That said, the full extent of our price action, which has been announced is not captured in Q4. So we will get a full quarter of shipments in Q1 with some trailing impact as we review contracts. So overall, we see margin -- gross margin hanging in at the Q4 exit level as long as we maintain the revenue and mix that we expect.

Operator

Our next question comes from Vivek Arya with Bank of America Securities.

Vivek Arya

Vincent, I'm very interested to hear your thoughts about fiscal '27. If I look over the last 2 years, ADI's top line has accelerated think almost every quarter on a year-on-year basis. And how much of that do you think has been kind of secular? How much of that has been cyclical? And how much of that has been rising? And if I were to just take you outlook midpoint and just assume normal seasonality, it suggests at least like a 20% or so plus growth year into fiscal '27. So just curious to hear what your high-level thoughts are? Are there any areas of constraint. And if I could seeking something related to that, is there more operating leverage left if indeed, your top line were to grow 20%?

Vincent Roche

Well, we'll take the rest of the call, Vivek, to answer those questions. So what I'll say is, let me unpack a little bit of the story and then Rich can add some of his own commentary as well. So since we called the bottom in the second quarter of '24, we're seeing our particular strengths manifest through the following kind of areas. So we're clearly a beneficiary of the defense and the AI summer cycles, which I think will persist for many, many years to come. Who knows what the trajectories will look like. But the -- right now, the aerospace and defense, the ATE and data center business is there about 30% of ADI and our portfolio is exposed and I think, poised for greater growth and more content and more share gains.

Of course, we're gaining share right across the spectrum of the car types, the combustion as well as EVs. Also in consumer, we turned a corner in consumer 2 or 3 years ago, and we're seeing both content and share gains there right across the high end -- mid- to high-end smartphone, gaming, hearables, wearables and so on and so forth. I've mentioned several times before as well, the Maxim synergies. So we had said our expectation when we announced the acquisition of Maxim that we would generate $1 billion worth of synergies while we're well on track. We'll go about $700 million this year. And I expect that we'll hit $1 billion plus in 2017 as well.

So I think as well -- the overall cyclical tailwind, I think, is also very, very strong across the board. And given the breadth of our portfolio, that lifts the -- all the boats aside from the symmetric tailwinds that we have. And as Rich talked a little bit about as well, the -- we've got a very favorable backdrop in terms of pricing. And so I think we've capitalized on the vectors of growth. And I think our portfolio is more critical than ever to our customers. I will point out as well that our lead times are in good shape. As Rich said, we are sitting on record inventories, but at the same time, our inventories are very intentionally placed built in place. And that's thanks to the manufacturing agility that we've built in with our hybrid model and that we continue to extend the scope of.

So Rich, maybe you want to add a little more color.

Richard Puccio

Yes. I guess, Vivek, what I would add is, as we've been talking about this, the inventory position, the important piece to consider is with the significant demand we're seeing, we still think that we have not seen really any restocking activity from inventory from our customers. They continue to run very lean. And I think that our work over the last 2 years to balance out the inventory, both on our balance and in the channel has really been helpful. So we, obviously, look into the next quarter, we will continue to stage more inventory in the channel given the acceleration going there. So I think there's still a lot of opportunity.

And if you look at where we are from a consumption pattern, as Vince described, those 3 big secular drivers that are specific to our business, we can see real end demand, right? We're seeing the massive increase in AI infrastructure spend. We're seeing the aerospace and defense business grow. So if you extract those pieces out and then look at the broader parts of our business, most of our business is still shipping well below historical consumption levels. So we think we're still have room here on both the cyclical part of the upturn when we look at the broader markets I just described, and we continue to see strength across obviously the aerospace, defense, ATE and data center businesses.

Vincent Roche

So I think, in summary, we believe we're very, very well positioned as a company. But I think the things that are under our control, I think we're executing well on. But there's a lot of things that can happen with the macro. There's heightened geopolitical risk and rate hikes, of course, there's a lot of volatility, as we all know, in the financial markets. perhaps AI CapEx could slower decrease. But all that said, our expectation is that we'll have a brisk growth year in '27.

Operator

Our next question comes from Stacy Rasgon with Bernstein Research.

Stacy Rasgon

On the data center side, you said that 80% of your comm business was now data center, which I found interesting. And I mean that data center leases, I don't know it's doubling, is growing 100%. Is that the kind of growth rate I ought to be thinking about now for at least the comm segment next year '27 given the vast majority of this data center? Do you think that, that comp segment should be growing close to 100% year-over-year as I start to think about '27? And I guess maybe within that question, if you could give us any color on what you're expecting for the segment, at least in the near term into Q4, that would be helpful as well.

Richard Puccio

Yes, Stacy, maybe we'll start with the near-term stuff and kind of the end market outlook, and then we can maybe pass it to, Vince, for the AI outlook or the data center.

Yes. So yes, I guess I can take the one. So basically, at the midpoint of our outlook, we're expecting industrial to be up high single digits communications to lead the growth, obviously, led by data center up about 10%, consumer up high single digits and automotive to be up low single digits. And then as for the growth in kind of animal data center, which is basically your question, just on a longer-term basis, at a high level, there's many growth vectors.

First of all, the market is strong. the end market is growing double digits. If you look at CapEx, what have you? And then importantly, as Vince talked to on his call, right, the analog BOM content is increasing significantly, particularly as we transition to 800-volt, et cetera. And obviously, we're -- the investments we're making, if we're targeting to increase share in a lot of places, right? So at a high level, we expect strength in data center for multiple years to come.

Vincent Roche

Yes. So I think, Stacy, rather than give you a number for '27, we're almost double on a pace to be 2x in '26. And my sense is that we'll see an extended runway to at least 2030 for strong double-digit growth across the data center market as well as the energy space, by the way, which today is about $0.5 billion revenue for ADI. I think by the end of the decade, that business will double.

Operator

Our next question comes from Tore Svanberg with Stifel.

Tore Svanberg

Vince, I had a bit of a longer-term question for you as it relates to analog. I mean it's an industry that historically has grown high single digits. But with analog now benefiting typically more from a infrastructure and then to your point, eventually from physical AI. Should we assume that the underlying growth of the analog industry is clearly shifting upwards here, both from a unit and a pricing perspective?

Vincent Roche

Yes. I think it is -- tore, thanks for the question. I think it's possible for the analog to be in the double-digit zone compounded for several years to come. And you just look at data center alone, if I just take data center, there's expected to be 100 gigawatts equivalent infrastructure built for data centers between now and kind of 2031. Each gigawatt generates $1 billion to $1.5 billion analog set, and the problems are becoming more complicated in data center. So it's going to increase the sophistication and the pricing capabilities of the solution. So my sense is it's not unreasonable. We had in our earnings day, which was what 2021, I think it was, we had said we thought our business could grow 5% to 7%. And we're contemplating something higher in the out years from here.

Operator

Our next question comes from Mark Lipacis with Evercore.

Mark Lipacis

Great. And maybe if I could follow up on that. And Vince, thanks for putting a number out there and a double-digit range. The last time ADI revenues were above that long-term 5% to 7% trend line was back in the late '90s, early 2000. And there were similar arguments being made about the build-out of the Internet, and there's telecom deregulation. And I'm wondering, Vince, if you could just go back in time and compare what is the difference between the secular dynamics you see today and what many people saw back then. We tend to bringing analog renews, not just yours but the industry back down to that 5% to 7%.

Vincent Roche

Yes. I think first off, because I looked through that myself, the concentration was much -- was quite high at the time. What I'm seeing now, I mean, if you look at the industry and the intervening period of time, more and more intelligence has been brought into the world of information technology, more edge, more intelligent edge. And that's increased, I think just the SAM, the TAM and the SAM for the analog sector with every bit of information that's been processed. The value of that content has increased with every bit every watt.

And so what we're seeing -- and if you look at ADI, just as a company, the portfolio, the breadth of our portfolio, the depth of our portfolio, the number of places in which we play is far, far greater. So as I said in my prepared remarks, what we've built into this company's business model is optionality. We get to pick or the markets chooses for the asymmetries. And then we have these compounding businesses that make the company extremely resilient. So I think from our perspective, the industry is just -- it's broader, it's deeper. Analog is much, much more important. And the whole -- we think over the next 25, 50 years, a lot of economic growth is going to be built on externalized intelligence. The gravity field of AI pulling everything with it.

But I think the pervasiveness of what the analog industry offers now in general is much, much greater, and we've got this gravity field, irrespective of what might happen from a cyclical perspective in the coming years. My sense is we have never ever had a cycle like we've now got, just its breadth, its depth and the gravity field over to pull it along.

Operator

Our next question comes from Blayne Curtis with Jefferies.

Blayne Curtis

I wanted to ask, just going back to the data center, but I guess in the past, you referred to AI exposure that includes ATE. Just trying to -- as you look at the growth calculus and you have the data center part growing triple digits, curious how to frame the opportunity for ATE, and I don't know if you're willing to break out how big that was.

Richard Puccio

Yes, Blayne. So in the past, you're right. We've talked about the AI exposure as ATE plus our data center business. Combined, those are 20% of ADI. Without giving numbers for 4 years growth, I mean I think clearly, we've got a lot of confidence, which importantly is backed up by our design and activity, right? It's not just hopes and dreams. If we look at our pipeline, the design activity with customers is strong in ATE as well as across data center, not just in Power but optical as well, right? I think you heard Vince on the prepared remarks.

So at a high level, I mean, that 20% of ADI has got a really strong growth tailwind behind us. And we feel like it's multiyear, right? And that's -- and again, that's confidence because of our design activity, because of our backlog, our pipeline and the bookings momentum.

Operator

Our next question comes from Matthew Prisco with Cantor.

Matthew Prisco

Lots of talk about this really strong demand backdrop for years to come. So how do we think about ADI's supply capabilities today as these revenues continue to hire? At what point do we need to start thinking about capacity additions? And are there any constraints arising in the supply chain today or any areas that you see potential pressure as we move forward?

Vincent Roche

Yes. Well, clearly -- Rich?

Richard Puccio

Yes. Sure. I'll start, Matt, and then Vince maybe can talk some more about the longer term peaks. But from our perspective, we really are executing well from supply chains. As we've talked about, we've been able to deliver above seasonal growth for 9 straight quarters, and we're guiding to a tenth. We're continuing to build inventory, reflecting our ability to expand our internal capacity, as we've talked about. We continue to install new tools in available spaces as we are -- and we're also getting more wafers externally. So we feel like we're very well positioned for the near and medium-term demand.

And obviously, across the industry, there's some soft spots and lead times have started to extend but we're working really hard to keep them in check. Obviously, this demand acceleration is pretty unprecedented in recent memory. But we think we're very well positioned. We have a book-to-bill as we've talked about, that's above 1. We're not in that sort of unusually high space from a book-to-bill perspective. We are also -- and this helps us from a manufacturing efficiency perspective. We are getting a bit better visibility. We have some more orders coming in a bit longer term.

Now frankly, we asked our customers to help us by doing that. It gives us the ability to be more precise in leveraging the capacity we have. So we think we feel like we're in a good position. We do continue to add capacity as we go I'll give my sense. We are scenario planning what this could look like if this kind of growth sustains and how we would balance across our hybrid manufacturing with additional external wafers, but also whether we need to add capacity beyond what we're already doing and have been doing for the last 3 to 4 years.

Vincent Roche

Yes. I think in addition, not only do we look to continue to increase the scope of our internal manufacturing capabilities. We have a number of great partners externally as well that we work with, both on the front end and back end. So we're, I would say, jointly planning with our partners to take a long view to how we support all the various nodes that are critical to ADI from lithographically insensitive nodes, if you like, kind of 6 micrometers, that kind of level right down to 5 nanometers and 3 nanometers. So that's what we did during the covert cycle, just that we continue to extend the capability of that hybrid manufacturing system, that is our strategy going ahead.

And just remember, a couple of years ago, it was expected that the semi industry in totality reached $1 trillion by 2030. Well, that's kind of in the wake at this point, and we're looking to something much, much bigger. So the industry has a big, big task to get ahead of what we now think the new growth trajectory is, including ADI.

Jeff Ambrosi

We'll take our last question, please.

Operator

And our last question comes from Joshua Buchalter with TD Cowen.

Joshua Buchalter

Congratulations on the very strong results in guidance. The 74% gross margin outlook is pretty staggering and back to the 2022 peak levels. It's also coming with all that much incremental utilization tour. I guess bigger picture, through cycle, is that a number that you think you can sort of hold and grow off of? And I guess, as we think longer term, can you speak to how you're prioritizing revenue growth versus margins, if you are? Like is this low to mid-70% level, one that you intend to manage to long term, I guess?

Richard Puccio

Sure. So I do think, as I previously mentioned, Josh, we can continue to grow -- excuse me, continue to maintain that sort of roughly 74% level. And we will continue to focus, and I said this in the last call, we will continue to focus on growth investments, which some of them may put some pressure on margins as we expand revenue growth dollars -- but when you look at the balance of our portfolio and the parts of the portfolio that continue to grow, the opportunity to maintain that margin exists.

We are getting, as you mentioned, a ton of benefit by running the factories at the higher utilizations, which we expect will sustain throughout this up cycle. So we feel pretty good and we're going to balance the investments we need to make to grow with maintaining that relatively maintaining that margin. I said this last quarter, and I'll repeat it here. I don't think, for instance, there's a ton of room to get more margin accretion out of utilization. But we are still only in a 49% industrial mix. So if the mix shifts, there's potential for upside or at least to be able to offset any potential headwinds. Because the other thing that is going to happen is we expect that the inflationary environment will continue. Now we'll continue to monitor and track and focus on that as we have historically. But I do think we're in a pretty balanced position for the medium and long term here.

Vincent Roche

Yes, I think just one other comment. I mean, the origin of the high gross margin structures is the innovation premium that we attract. So our job is to keep that premium moving. And then the cycles help get the efficiency in manufacturing. So those 2 things. One is obviously, very strategic and the other operational. But those 2 parts we see having a lot of legs for a lot of years to come. Our customers are asking us to tackle more difficult problems, take on more of the work, so to speak, and the breadth and the depth of the high-performance portfolio have positioned us well to continue to make that early stage, the origin of the gross margin continuing critical part of ADI's value proposition.

Operator

This concludes the question-and-answer session. I'd now like to turn it back to Jeff Ambrosi for closing remarks.

Jeff Ambrosi

Thanks, everyone, for joining us. A copy of the transcript will be available on our website and all available reconciliations and additional information can also be found in the Quarterly Results section of our Investor Relations website, investor.analog.com.

Thank you for your continued interest in Analog Devices. And have a good day.

Operator

This concludes today's Analog Devices conference call. You may now disconnect.