Should You Reassess Analog Devices Stock After Its 12% Gain in 2025?

If you’re wondering what to do with Analog Devices stock these days, you’re not alone. Investors everywhere are weighing their next move, as this company, a stalwart in the semiconductor space, continues to attract attention with its long-term performance. Over the past five years, the share price has more than doubled, up 111.2%, which speaks to the company’s strength and the broader demand for chipmakers. Even though this year’s gain sits at 12.6%, recent weeks have brought a slightly choppier ride, with the stock easing back by 0.6% over the last week and dropping 4.4% in the past month. Yet in the grand scheme, Analog Devices has maintained a steady climb.

These moves reflect subtle shifts in the market’s view on risk and the appetite for growth stocks. Developments in global chip supply chains and ongoing interest in tech infrastructure continue to influence the mood, with Analog Devices riding those broader tides. But as investors, our big question isn’t just about past performance, it’s about value. Is the stock, at its current price of $237.93, actually undervalued? According to our value analysis, Analog Devices scored a zero out of six possible checks for undervaluation. That means it isn’t technically undervalued by traditional methods. But don’t tune out just yet. We’re about to dig into how each valuation method stacks up, and explore a smarter, even more insightful approach at the end.

Analog Devices scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Analog Devices Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a key valuation tool that estimates what a company is really worth by projecting its future cash flows and discounting them back to today’s value. For Analog Devices, this method starts with the company’s latest reported Free Cash Flow of $3.33 Billion. Analysts provide detailed forecasts for the next five years, with projections moving from $4.91 Billion in 2026, $5.62 Billion in 2027, $6.76 Billion in 2028, and reaching $7.69 Billion by 2029 and 2030. Beyond those years, estimates are extrapolated using average growth rates, since analyst estimates typically do not extend that far out.

Simply Wall St uses a two-stage Free Cash Flow to Equity model for Analog Devices, accounting for higher growth in the near term and more modest increases further out. After crunching all these future cash flows and applying the relevant discount rate, the intrinsic value per share comes out to $212.23.

With the current share price sitting at $237.93, this model suggests the stock is trading at a 12.1% premium to its calculated fair value. In other words, by this method, Analog Devices looks overvalued at today’s levels.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Analog Devices.

Our Discounted Cash Flow (DCF) analysis suggests Analog Devices may be overvalued by 12.1%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Analog Devices Price vs Earnings (PE)

For companies like Analog Devices that generate reliable profits, the Price-to-Earnings (PE) ratio is a tried-and-true way to gauge value. This metric tells you how much investors are willing to pay for each dollar of earnings, helping to make sense of whether a stock looks expensive or cheap compared to its profits. It is important to remember that faster-growing companies and those with more stable earnings typically command higher PE ratios, while riskier or slower-growing businesses tend to trade on lower ones.

At the moment, Analog Devices trades at a PE ratio of 59.8x. That is considerably higher than the semiconductor industry average of 38.4x and far above the peer average of 25.2x. On the surface, this makes the stock appear pricey relative to its rivals. But context matters. Simply Wall St’s Fair Ratio model factors in more than just industry benchmarks. It incorporates Analog Devices’ earnings growth outlook, profit margins, market capitalization, and any risks tied to its business to produce a more personalized view of fair value.

According to this approach, Analog Devices’ Fair Ratio stands at 40.5x. This number suggests the company should trade at a premium versus the average, but its actual PE ratio is still significantly above this fair level. Since the gap between the Fair Ratio and the current PE is substantial, this method flags the stock as overvalued by PE multiples right now.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Analog Devices Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your unique perspective on a company; it is the story behind the numbers, where you set assumptions for Analog Devices’ future revenue, earnings, and margins to craft your own fair value estimate.

With Narratives, each story links a real-world outlook or industry development directly to a financial forecast and a calculated fair value, helping you turn your point of view into a concrete investment thesis. This tool, now easily accessible on the Simply Wall St Community page and used by millions of investors, gives you the power to see how your scenario stacks up to others and to the current market price. Narratives make buy or sell decisions more intuitive by letting you compare your Fair Value instantly to the actual price, and because they update dynamically as new data or news comes in, your conclusions stay current with market shifts.

For example, some investors see strong automation and AI adoption driving Analog Devices’ earnings to $4.9 billion by 2028 with a fair value of $310, while others, focused on competition and risk, forecast just $3.4 billion in earnings and a fair value closer to $155. You can choose, or even create, the narrative that best matches your outlook.

Do you think there's more to the story for Analog Devices? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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