Analog Devices Vs NVIDIA: Which Stock Is The Better Buy?
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Analog Devices (ADI) and NVIDIA (NVDA) are both bought for the AI data center buildout, and the better buy depends on how much of your money you want on that one bet. NVIDIA made $89 billion of its $96 billion fiscal Q2 2027 revenue from data centers. At Analog Devices, management puts its AI exposure at about 20% of the company. That share counts its ATE and data center businesses together. So what did each company tell investors in August about the quarters ahead?
Analog Devices Expects Higher Margins, NVIDIA Expects Lower
Analog Devices told investors on August 19, 2026, that it expects its adjusted gross margin to rise to about 74% in fiscal Q4 2026, up from 72.5% in fiscal Q3. Management tied the gain to a better product mix, higher volumes and its own price increase, adding that the full effect of that price increase is not yet in the fiscal Q4 outlook.
The outlook from NVIDIA moved in the opposite direction. Memory prices rose more than management expected, leading the company to reset its margin outlook. NVIDIA now expects its gross margin to bottom at 71% to 72% in fiscal Q4 2027, down from 75% in fiscal Q2. The company’s own price increases only take effect in fiscal Q1 2028.
Both companies guided revenue above the quarter they had just reported, meaning the two outlooks differ on profit rather than demand. Analog Devices is raising its prices now. NVIDIA is absorbing higher memory costs until its own price increases arrive.
Where NVIDIA And Analog Devices Spend Cash
NVIDIA is backing its own customers. Management said on the August 26, 2026 call that NVIDIA has invested nearly $50 billion in frontier AI labs, and that it expects AI labs it supports with its balance sheet to make up roughly a quarter of its business next year. Management also said it knows some will call this circular financing, though it said it sees the arrangements differently. That is the cost of NVIDIA’s approach: more of its growth now depends on how those labs fare.
Analog Devices spends on acquisitions and shareholders. The company paid $1.5 billion in cash for Empower Semiconductor in July 2026, and in November 2026 completed its acquisition of Alif Semiconductor for $1.35 billion in cash plus up to $200 million in contingent payments, funded with part of a $3 billion bond sale in September. Management said it returned more than all of its free cash flow over the past twelve months to shareholders. On August 1, 2026, before that bond sale, Analog Devices owed $9.12 billion against $2.32 billion in cash and short-term investments.
NVIDIA Comes Out Ahead On Valuation, Growth And Margins
NVIDIA is the cheaper stock on an earnings basis. At the November 11, 2026 close, NVIDIA traded at 21.8 times its trailing twelve-month earnings, while Analog Devices traded at 48.1 times.
NVIDIA is also growing faster. Its revenue over the four quarters to July 26, 2026, rose 83.4% from a year earlier, compared with a 33.6% increase for Analog Devices over the four quarters to August 1, 2026.
NVIDIA keeps far more of each sales dollar as profit, though Analog Devices is closing part of that gap. Over its latest twelve months, NVIDIA recorded a 65.2% GAAP operating margin, up from 58.1% a year earlier. The operating margin at Analog Devices rose faster, climbing to 35.7% from 25.3%. NVIDIA’s debt is also smaller for its size, at 0.9% of its market value compared with 4.6% for Analog Devices, based on its August 1, 2026 balance sheet, before its September bond sale.
On these measures NVIDIA has the edge: a lower P/E, faster growth, a wider margin and less debt for its size. Analog Devices offers a margin that is improving faster and a business far less tied to AI alone. NVIDIA’s gross margin, which management expects to fall through fiscal Q4 2027, is the result to watch. NVIDIA is scheduled to report Q3 FY2027 results on November 17, 2026, followed by Analog Devices reporting Q4 FY2026 results on November 24, 2026.
Beyond ADI: A Systematic Way To Invest
Before you decide on ADI, consider a better choice. Since its September 2020 launch, the Trefis High Quality (HQ) Portfolio has returned 105%, ahead of a benchmark that combines the S&P 500, S&P MidCap and Russell 2000, without betting on one stock.
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