Analog Devices (ADI) falls 12.8% in 90 days amid AI pullback

Analog Devices has been caught in a wider pullback across chip and AI-related stocks. The trigger, according to the article, was several high-profile AI leaders calling for slower development, which raised questions about future capital spending across the sector. For a company that had been rewarded for its AI and data center exposure, that shift in sentiment shows up clearly in the numbers: a 7.2% decline over 30 days and 12.8% over 90 days, set against a 32% year to date share price return and a 49.9% 1 year total shareholder return.

The article lays out two competing views of what the stock is worth. The most followed narrative points to a fair value of about $451, roughly 20% above a last close of $361.35. A P/E-based view is less generous: the stock trades on a 42.3x P/E, below the US Semiconductor industry average of 45.3x but above a 38.6x peer group level and a 32.3x fair ratio estimate. The narrative view leans on robust expansion of AI infrastructure, green energy investments, and aerospace & defense outlays, which the article says are creating healthy backlog and supply-constrained opportunities as ADI ramps internal capacity.

What the outcome hinges on is whether that demand picture holds. The article flags that softening industrial and auto demand, or accelerating competition from lower cost analog suppliers, could test the bullish narrative. For investors weighing the gap between the last close and the fair value estimate, the test is likely whether the sector-wide cooling in AI sentiment is a pause or a reset in expectations.