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ON Semiconductor (ON)
NASDAQ:ON
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ON Semiconductor
(NASDAQ:ON)
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Rating:64Neutral
Price Target:
$63.00
▲(9.20% Upside)
Action:ReiteratedDate:02/10/26
The score is primarily supported by strong cash-flow resilience and a solid balance sheet, plus constructive technical momentum and a generally positive earnings-call outlook (FCF focus, buybacks, AI traction, and margin actions). The biggest constraint is valuation, with a very high P/E and no dividend yield provided, alongside the recent profitability downturn and near-term underutilization/non-core exit headwinds.
Positive Factors
Free Cash Flow Generation
Sustained, record FCF provides durable financial flexibility: it funds R&D, supports the $6B repurchase program, and cushions cyclical revenue/earnings volatility. Strong cash conversion also lets management prioritize strategic investments over short-term revenue fixes.
Balance Sheet & Liquidity
Robust liquidity and a manageable leverage profile give the company lasting financial resilience to fund capital spending, share repurchases, and operational adjustments during downcycles. Sizeable equity versus debt enhances borrowing flexibility for strategic initiatives.
Product & Technology Momentum
Broad product roadmap (Treo, GaN/VGaN, VCORE) and expanding design funnel strengthen secular competitiveness across automotive, industrial and AI datacenter markets. Technology leadership and diversified wins support sustainable revenue streams as end markets recover.
Negative Factors
Revenue & Profitability Downcycle
Consecutive annual revenue declines and compressed operating earnings reduce operating leverage and limit margin resilience. Persistent top-line weakness can constrain reinvestment, make fixed-costs heavier, and extend recovery timelines for normalized profitability.
Manufacturing Underutilization
Low utilization materially pressures gross margins via fixed-cost absorption; management notes mid‑to‑high utilization is needed to erase the ~700bps headwind. Until utilization recovers, margins face structural drag even if demand stabilizes.
Leadership Transition in Power Group
Departure of the Power Solutions Group leader introduces execution risk in a core unit driving automotive and energy markets. Transition timing and successor choice could impact customer continuity, product roadmaps and the unit's ability to execute margin and capacity rationalization plans.
ON Semiconductor (ON) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$22.73B
Dividend YieldN/A
Average Volume (3M)9.35M
Price to Earnings (P/E)183.9
Beta (1Y)1.70
Revenue Growth-16.13%
EPS Growth-81.06%
CountryUS
Employees26,400
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)0.64
Shares Outstanding394,020,540
10 Day Avg. Volume8,241,383
30 Day Avg. Volume9,349,489
Financial Highlights & Ratios
PEG Ratio-2.00
Price to Book (P/B)2.90
Price to Sales (P/S)3.71
P/FCF Ratio15.69
Enterprise Value/Market Cap1.09
Enterprise Value/Revenue4.15
Enterprise Value/Gross Profit12.65
Enterprise Value/Ebitda28.01
Forecast
1Y Price Target
$67.88Price Target Upside17.66% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering28
EPS Forecast (FY)2.92
Revenue Forecast (FY)$6.28B
ON Semiconductor Business Overview & Revenue Model
Company DescriptionON Semiconductor Corporation provides intelligent sensing and power solutions worldwide. Its intelligent power technologies enable the electrification of the automotive industry that allows for lighter and longer-range electric vehicles, empowers fast-charging systems, and propels sustainable energy for the solar strings, industrial power, and storage systems. The company operates through three segments the Power Solutions Group, the Advanced Solutions Group, and the Intelligent Sensing Group segments. It offers analog, discrete, module, and integrated semiconductor products that perform multiple application functions, including power switching and conversion, signal conditioning, circuit protection, signal amplification, and voltage regulation functions. The company also designs and develops analog, mixed-signal, advanced logic, application specific standard product and ASICs, radio frequency, and integrated power solutions for end-users in end-markets, as well as provides foundry and design services for government customers. In addition, it develops complementary metal oxide semiconductor image sensors, image signal processors, and single photon detectors, including silicon photomultipliers and single photon avalanche diode arrays, as well as actuator drivers for autofocus and image stabilization for a broad base of end-users in various end-markets. ON Semiconductor Corporation was incorporated in 1992 and is headquartered in Phoenix, Arizona.
How the Company Makes MoneyON Semiconductor generates revenue primarily through the sale of its semiconductor products. The company's revenue model is based on the production and distribution of a diverse portfolio of semiconductor solutions, which includes power management ICs, sensors, and custom chips for specific applications. Key revenue streams include sales to automotive customers, which are increasingly adopting advanced semiconductor technologies for electric and autonomous vehicles, as well as industrial and consumer electronics sectors. Significant partnerships with major manufacturers and technology firms enhance ON's market presence and facilitate growth. Additionally, the company benefits from economies of scale and a strong focus on R&D, allowing it to maintain competitive pricing and innovate new products that meet market demands.
ON Semiconductor Key Performance Indicators (KPIs)
Any
Revenue by End Market
Shows revenue distribution across various end markets, offering a view of the company's exposure to different industries and potential shifts in demand.
Shows revenue distribution across various end markets, offering a view of the company's exposure to different industries and potential shifts in demand.
Data provided by:
The Fly
The FlyON Semiconductor Earnings Call Summary
Earnings Call Date:Feb 09, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 04, 2026
Earnings Call Sentiment Positive
The call presented materially positive strategic and financial progress: record free cash flow, disciplined capital return, product and technology momentum (Treo, GaN/VGaN, VCORE), and clear AI data center traction (> $250M FY). Management also detailed concrete margin-improvement actions (FabRite, capacity rationalization) and provided constructive Q1 guidance. Near-term challenges include meaningful underutilization charges (~700 bps), planned exits of non-core revenue (~$50M in Q1 and ~ $300M implied for the year), and YoY declines in several legacy segments. Taken together, the positives — strong cash generation, share repurchases, technology/design wins, and a path to margin expansion — outweigh the near-term operational and demand headwinds, though execution and market recovery timing remain important.Q4-2025 Updates
Positive Updates
Full-Year Revenue and Margin Strength
2025 revenue of $6.0 billion with full-year non-GAAP gross margin of 38.4%, demonstrating resilience in a challenging demand environment.
Quarterly Results Above Guidance
Q4 revenue of $1.53 billion, non-GAAP gross margin of 38.2%, and non-GAAP EPS of $0.64 — all at or above the midpoint of guidance.
Record Free Cash Flow and Capital Return
Record free cash flow of $1.4 billion (up 17% year-over-year) representing a 24% free cash flow margin. Returned ~$1.4 billion to shareholders in 2025 (including $450 million repurchased in Q4), and announced a new $6 billion share repurchase program.
AI Data Center Momentum
Delivered more than $250 million of AI data center revenue in 2025 with growing design wins across UPS, rack, XPU board and point-of-load. Management expects AI data center revenue to continue growing (Q1 AI revenue expected to grow in the high teens).
Product and Technology Progress (Treo, GaN, VGaN, VCORE)
Treo platform: doubled number of products sampling year-over-year and design funnel now over $1 billion. Announced plan to sample 30+ GaN devices across 40–1,200V in 2026 and commercial VGaN roadmaps with first VGaN revenue expected in 2027. Integrated VCORE assets being sampled (dual 5x5) to strengthen portfolio for next-gen architectures.
End-Market Wins and Share Leadership
Utility string ESS share >50% worldwide; ramping IGBT and SiC hybrid power modules with customers; aerospace, defense & security revenue grew ~70% year-over-year driven by North America and Europe with a strategic design win for a SiC JFET solid-state circuit breaker.
Improved Industrial and Automotive Trends
Industrial revenue of $442 million in Q4, up ~4% sequentially and +6% year-over-year (first YoY increase after eight quarters of declines). Automotive revenue stabilized at $798 million in Q4, up ~1% sequentially; company cites most automotive inventory digestion as 'largely behind us'.
Manufacturing Rationalization and Margin Actions
FabRite actions reduced fab capacity ~12% in 2025; additional measures expected to lower 2026 depreciation by $45–50 million. Management expects FabRite and other operational improvements to contribute to margin expansion through 2026 (Q1 midpoint includes ~30 bps benefit from FabRite).
Prudent Balance Sheet Metrics
Cash and short-term investments approximately $2.5 billion, total liquidity ~$4.0 billion (including $1.5 billion undrawn revolver). Inventory improved modestly (days decreased to 192 days from 194 days; strategic inventory down to 76 days).
Negative Updates
Underutilization and Gross Margin Headwind
Manufacturing utilization was 68% in Q4 and the quarter included ~700 basis points of underutilization charges to gross margin; utilization expected to be in the low-70% range in Q1 and mid-70s thereafter but management indicated low-90% utilization is needed to fully dissipate the underutilization headwind.
Planned Exits of Non-Core Revenue
Q4 included ~$40 million of non-core exits and management expects ~$50 million of exits in Q1 with comments implying approximately $300 million of exits over the year. These exits reduce reported revenue and add near-term volatility to results.
Segment YoY Revenue Declines
Power Solutions Group (PSG) revenue $724 million in Q4, down ~11% year-over-year; Analog & Mixed Signal Group (AMG) $556 million, down ~9% year-over-year; Intelligent Sensing Group (ISG) $250 million, down ~17% year-over-year.
Softness and Seasonality in 'Other' Category
The 'Other' category fell ~14% sequentially in Q4 due to seasonality and softness outside AI data center (and contains the non-core exits), indicating pockets of demand weakness.
GAAP Impact and Restructuring
Q4 GAAP EPS of $0.35 versus non-GAAP EPS of $0.64; GAAP gross margin 36% vs non-GAAP 38.2%. GAAP operating expenses included $59 million of restructuring charges in the quarter.
Near-Term Industrial and Auto Headwinds Persist
Although industrial showed signs of stabilization in Q4, management noted ongoing seasonality and lumpiness (Chinese New Year headwinds) and said demand visibility remains limited; auto restocking has not materially commenced despite inventory digestion.
Company Guidance
ON Semiconductor guided Q1 2026 revenue of $1.44–$1.54 billion (midpoint in line with seasonality; would be above seasonal excluding ~$50 million of non‑core exits), non‑GAAP gross margin of 37.5%–39.5% (includes ~$7M share‑based comp; FabRite actions to add ~30 bps at the midpoint), non‑GAAP operating expenses of $285–$300 million (includes ~$29M SBC), non‑GAAP other income net benefit of ~$7M, a non‑GAAP tax rate of ~15%, ~397 million diluted shares, and non‑GAAP EPS of $0.56–$0.66; capital expenditures are expected to be $35–$45 million, manufacturing utilization is forecast in the low‑70% range for Q1 (up from 68% in Q4, with mid‑70s expected thereafter), the company noted a roughly $45–$50 million reduction in 2026 depreciation from FabRite actions, and reiterated expectations for strong free cash flow in 2026 alongside its $6 billion share repurchase program.ON Semiconductor Financial Statement Overview
Summary
Strong and resilient cash generation (operating cash flow consistently strong; free cash flow positive and growing in 2025) and a generally healthy balance sheet (equity sizable vs. debt) support the score. Offsetting this, profitability and revenue weakened sharply in the latest year with notable operating earnings compression, reflecting cycle-driven margin and demand pressure.Income Statement
Profitability has weakened sharply versus prior years: revenue declined in 2024 and again in 2025 (annual), and net income fell from strong 2022–2024 levels to a much lower level in 2025. While gross profit dollars remain solid, operating earnings compressed materially in 2025, signaling margin pressure and a tougher demand/pricing environment. The main strength is the company’s demonstrated ability to generate strong margins and profits in 2022–2024; the key weakness is the recent downcycle and reduced earnings power in the latest year.58
Neutral
Balance Sheet
The balance sheet appears generally healthy with sizable equity relative to debt and a manageable leverage profile in recent years (debt below equity in 2023–2024). Equity has grown meaningfully since 2020, indicating improved capitalization through the cycle. However, total debt remains large in absolute terms, and profitability volatility (as seen in 2025) could make leverage feel heavier in a prolonged downturn. Overall, financial flexibility looks solid but not immune to cyclical pressure.74
Positive
Cash Flow
Cash generation is a clear strength: operating cash flow has been consistently strong across the period and remained robust in 2025, with free cash flow also positive and growing in 2025. Cash flow has at times outpaced accounting earnings (notably in 2025), which supports resilience during weaker profit periods. The main weakness is variability in free cash flow across years (including a notably weaker 2023), suggesting capital spending and working-capital swings can materially affect cash conversion.77
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 6.00B | 7.08B | 8.25B | 8.33B | 6.74B |
| Gross Profit | 1.94B | 3.22B | 3.88B | 4.08B | 2.71B |
| EBITDA | 888.20M | 2.54B | 3.22B | 3.01B | 1.88B |
| Net Income | 121.00M | 1.57B | 2.18B | 1.90B | 1.01B |
Balance Sheet | |||||
| Total Assets | 12.52B | 14.09B | 13.22B | 11.98B | 9.63B |
| Cash, Cash Equivalents and Short-Term Investments | 2.55B | 2.99B | 2.48B | 2.92B | 1.35B |
| Total Debt | 3.47B | 3.37B | 3.36B | 3.23B | 3.10B |
| Total Liabilities | 4.83B | 5.28B | 5.41B | 5.77B | 5.02B |
| Stockholders Equity | 7.67B | 8.80B | 7.78B | 6.19B | 4.59B |
Cash Flow | |||||
| Free Cash Flow | 1.42B | 1.21B | 438.40M | 1.60B | 1.29B |
| Operating Cash Flow | 1.76B | 1.91B | 1.98B | 2.63B | 1.78B |
| Investing Cash Flow | -538.50M | -1.01B | -1.74B | -705.40M | -915.10M |
| Financing Cash Flow | -1.76B | -683.80M | -686.50M | -370.00M | -569.40M |
ON Semiconductor Technical Analysis
Negative
57.69
Price Trends
63.12
Negative
57.36
Positive
54.52
Positive
Market Momentum
-1.58
Positive
35.18
Neutral
29.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ON, the sentiment is Negative. The current price of 57.69 is below the 20-day moving average (MA) of 65.62, below the 50-day MA of 63.12, and above the 200-day MA of 54.52, indicating a neutral trend. The MACD of -1.58 indicates Positive momentum. The RSI at 35.18 is Neutral, neither overbought nor oversold. The STOCH value of 29.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ON.
ON Semiconductor Risk Analysis
ON Semiconductor disclosed 38 risk factors in its most recent earnings report. ON Semiconductor reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
ON Semiconductor Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $4.45T | 37.75 | 104.37% | 0.02% | ― | ― | |
77 Outperform | $23.86B | 14.74 | 11.36% | 6.06% | 5.87% | -20.93% | |
69 Neutral | $23.12B | 21.96 | 7.68% | ― | 0.25% | -106.22% | |
64 Neutral | $22.73B | 183.93 | 1.53% | ― | -16.13% | -81.06% | |
63 Neutral | $45.87B | 26.78 | 12.81% | 2.29% | 8.01% | 10.41% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
56 Neutral | $29.75B | 136.11 | 0.97% | 1.28% | -17.33% | -76.71% |
* Technology Sector Average
ON
ON Semiconductor
57.69
14.50
33.57%
ASX
ASE Technology Holding Co
20.99
11.58
123.04%
NVDA
Nvidia
183.14
61.50
50.56%
STM
STMicroelectronics
33.24
8.66
35.24%
UMC
United Micro
9.35
2.87
44.22%
GFS
GlobalFoundries Inc
41.59
3.86
10.23%
ON Semiconductor Corporate Events
Business Operations and StrategyExecutive/Board Changes
ON Semiconductor Announces Leadership Transition in Power Solutions
Neutral
Mar 11, 2026
ON Semiconductor said that on March 9, 2026, it agreed with Simon Keeton, Group President of its Power Solutions Group, that he will resign from all employment positions effective June 30, 2026. Keeton, who joined the company in July 2007 and has led the Power Solutions Group since February 2024, will step down from his officer roles immediately but stay on until the end of June to support an orderly leadership transition in this key business unit.
The leadership change in the Power Solutions Group marks a significant shift for onsemi’s core power business, which is central to its strategic positioning in energy-efficient and automotive applications. While the company has not yet named a successor, the planned transition period is intended to minimize operational disruption and maintain continuity for customers and stakeholders as it prepares new leadership for the group.
The most recent analyst rating on (ON) stock is a Hold with a $64.00 price target. To see the full list of analyst forecasts on ON Semiconductor stock, see the ON Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.