AI-chip maker Analog Devices soared nearly 11% to an all-time high close Wednesday on its earnings results. On Thursday, the Relative Strength (RS) Rating, for Analog Devices stock jumped 11 points, from 77 to 88, passing a major milestone along the way.
The upgraded 88 RS Rating means that Analog Devices stock bested 88% of all stocks for price performance over the past year. Market research shows that the best stocks tend to have an 80 or higher RS Rating in the early stages of their moves.
Analog Devices Stock Rising On Hot Prospects
The company's results over the past year have been mediocre. The new high represents investor sentiment that Analog Devices stock will continue rising as its sales into the rapidly growing AI market rise.
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Analog Devices makes analog and mixed-signal chips for a variety of markets. Those are the chips that accompany microprocessors — the "brains" of computers and consumer electronics. They do tasks like regulating power levels, sound and so forth. Analysts project that sales of those chips will rise as the artificial intelligence boom continues to roll out.
Analog Devices stock shot up 10.8% Wednesday to a new intraday high 240.37 after it beat analyst estimates and guided higher, as reported earlier. The company retained the lion's share of that gain Thursday afternoon, and was was down about 2.5% amid a broad market retreat.
The Wilmington, Mass.-based company earned an adjusted $1.40 a share on sales of $2.16 billion in the quarter ended May 4. Analysts polled by FactSet had expected earnings of $1.26 a share on sales of $2.11 billion. Both earnings and revenue were below the year-ago figures but investors are overlooking that as Analog Devices stock appears to have turned the corner toward stronger results.
Other Ratings Mixed
Among its other ratings, Analog Devices has a 79 IBD Composite Rating. The score combines five separate proprietary ratings into one. The best growth stocks have a Composite Rating of 90 or better. Its so-so 54 Earnings Per Share Rating reflects declining profits over the past year.
However, a B Accumulation/Distribution Rating on an A+ to E basis shows that institutional investors are fairly heavy buyers of its stock. Additionally, the number of funds holding Analog Devices stock rose from 3,044 in December to 3,065 in March.
Analog Devices holds the No. 5 rank among its peers in the 33-stock Electronics-Semiconductor Manufacturing industry group. Taiwan Semiconductor ADR is the No. 1-ranked stock in the group.
IBD's unique rating measures price performance with a 1 (worst) to 99 (best) score. The grade shows how a stock's price movement over the last 52 weeks holds up against all the other stocks in our database.
Please follow James DeTar on X, formerly known as Twitter, @JimDeTar
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