⚠ Spending Less Into a BoomLow threat

Analog Devices (ADI) — threat to the moat

ADI is spending about $600 million a year on plant, less than half its fiscal 2023 level, as revenue reaches records.

ADI is spending less on plant in the strongest demand it has seen since 2022. Capital expenditure was $1,261.5 million in fiscal 2023, $730.5 million in 2024 and $533.6 million in 20251; over the twelve months to August 2026 it was $607.8 million2. Revenue over the same twelve months was $13,881.5 million3, a record.

Analog Devices capital expenditure ($M)699.3FY20221,261.5FY2023730.5FY2024533.6FY2025607.8TTM Aug 2026SEC XBRL capital expenditure; Analog Devices Q3 FY2026 results release
Spending near half the 2023 peak.

The bet is that the fiscal 2023 build left enough room. That may be right: a company that expanded its fabs and then saw revenue fall by nearly a quarter has spare capacity to fill. But the room is finite, and the guidance for the fourth quarter of fiscal 2026 is $4.3 billion4, which would be a record quarter.

The 10-K explains what happens when supply runs short. Customers who cannot get parts turn to other suppliers or build their own inventory, and the company notes that "In periods of increased demand, there is a tendency towards longer lead times"5. Longer lead times bring over-ordering, which brings the next inventory correction.

The company also plans to borrow for its acquisitions, with $3.0 billion of new notes issued in September 20266, so capital competes with deals and buybacks for the same cash.

If capital spending in fiscal 2026 stays below $700 million while revenue exceeds $15 billion, and lead times lengthen, the plant built in 2023 will have been the last cushion and the next shortage will arrive with no new capacity behind it.

References
  1. ReportedCapital expenditure was $1,261.5 million in fiscal 2023, $730.5 million in 2024 and $533.6 million in 2025; over the twelve months to August 2026 it was $607.8 million.
    SEC EDGAR XBRL, Analog Devices PaymentsToAcquirePropertyPlantAndEquipment: capital expenditure 154.0 (FY2015), 127.4, 204.1, 254.9, 275.4, 165.7, 343.7, 699.3, 1,261.5, 730.5, 533.6 (FY2025), $ millions. — FY2015-FY2025 · publ. 2025 · source ↗
  2. ReportedCapital expenditure was $1,261.5 million in fiscal 2023, $730.5 million in 2024 and $533.6 million in 2025; over the twelve months to August 2026 it was $607.8 million.
    Analog Devices third-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - revenue by end market, margins, EPS, cash flow, balance sheet and fourth-quarter guidance - highlights, income statement, adjusted measures and fourth-quarter guidance. — Q3 FY2026 · publ. 19 August 2026 · source ↗
  3. ReportedRevenue over the same twelve months was $13,881.5 million, a record.
    Analog Devices third-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - revenue by end market, margins, EPS, cash flow, balance sheet and fourth-quarter guidance - highlights, income statement, adjusted measures and fourth-quarter guidance. — Q3 FY2026 · publ. 19 August 2026 · source ↗
  4. ReportedBut the room is finite, and the guidance for the fourth quarter of fiscal 2026 is $4.3 billion, which would be a record quarter.
    Analog Devices third-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - revenue by end market, margins, EPS, cash flow, balance sheet and fourth-quarter guidance - highlights, income statement, adjusted measures and fourth-quarter guidance. — Q3 FY2026 · publ. 19 August 2026 · source ↗
  5. ReportedCustomers who cannot get parts turn to other suppliers or build their own inventory, and the company notes that "In periods of increased demand, there is a tendency towards longer lead times".
    Analog Devices Form 10-K for fiscal 2025 (year ended 1 November 2025) - Item 1 business: products, customers, engineers, competition and strategy. — FY2025 · publ. 25 November 2025 · source ↗
  6. ReportedThe company also plans to borrow for its acquisitions, with $3.0 billion of new notes issued in September 2026, so capital competes with deals and buybacks for the same cash.
    Analog Devices Form 8-K of 17 September 2026 - issue of $3.0 billion of senior notes due 2029, 2031, 2033 and 2036. — September 2026 · publ. 17 September 2026 · source ↗
Sources
Generated September 29, 2026