Analog stocks are at an all-time high

AI chip manufacturer Analog devices (ADI) rose nearly 11% to an all-time high at Wednesday’s close, based on earnings results. On Thursday, Analog Devices’ stock relative strength (RS) rating increased 11 points, from 77 to 88, setting a milestone.

The upgraded 88 RS rating means that Analog Devices shares have outperformed 88% of all stocks in terms of price ratio over the last year. Market research shows that the best stocks tend to have an RS Rating of 80 or higher in the early stages of their moves.

Analogue device stocks increase due to hot prospects

The company’s results for last year were mediocre. The new high reflects investor sentiment that Analog Devices shares will continue to rise as sales increase in the fast-growing artificial intelligence market.

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Analog Devices produces analog and mixed chips for a variety of markets. These are chips accompanying microprocessors – the “brains” of computers and consumer electronics. They perform tasks such as regulating power levels, sound, and so on. Analysts predict that sales of these chips will increase as the artificial intelligence boom continues.

Analog Devices shares rose 10.8% on Wednesday to hit a new intraday high of 240.37 after beating analyst estimates and rising as previously reported. The company retained the lion’s share of that gain Thursday afternoon and fell about 2.5% amid a broad market retreat.

The Wilmington, Massachusetts-based company earned an adjusted $1.40 per share on sales of $2.16 billion in the quarter ended May 4. Analysts polled by FactSet expected earnings of $1.26 per share on sales of $2.11 billion. Both earnings and revenue were lower than a year ago, but investors are overlooking that as Analog Devices stock appears to be turning towards outperformance.

Other mixed reviews

Among other ratings, Analog Devices has a Composite Rating of 79 IBD. The score combines five separate, proprietary ratings into one. Top growth stocks have a Composite Rating of 90 or higher. Its current rating of 54 earnings per share reflects declining earnings over the past year.

However, the B accumulation/distribution rating of A+ to E shows that institutional investors are buying the company’s shares quite intensively. Additionally, the number of funds holding Analog Devices shares increased from 3,044 in December to 3,065 in March.

Analog Devices ranks fifth among its peers in the electronics and semiconductor industry group with 33 companies. Taiwanese semiconductor ADR (TSM) is the company ranking first in the group.

The unique IBD rating measures price performance on a scale of 1 (worst) to 99 (best). The rating shows how a stock’s price movement over the last 52 weeks compares to all other stocks in our database.

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