ON Semiconductor (ON) AI Stock Analysis

• Market Cap: $20.28B
• Dividend Yield: N/A
• Average Volume (3M): 9.98M
• Price to Earnings (P/E): 46.3
• Beta (1Y): 1.38
• Revenue Growth: -17.93%
• EPS Growth: -75.83%
• Country: US
• Employees: 26,400
• Sector: Technology
• Sector Strength: 87
• Industry: Semiconductors
• EPS (TTM): 0.53
• Shares Outstanding: 408,974,000
• 10 Day Avg. Volume: 6,808,728
• 30 Day Avg. Volume: 9,983,696
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.20
• Enterprise Value/Revenue: 3.80
• Enterprise Value/Gross Profit: 10.07
• Enterprise Value/Ebitda: 19.32
• 1Y Price Target: $58.21
• Price Target Upside: 17.38% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 26

• Rating: 69 Neutral
• Price Target: $57.00 ▲(14.94% Upside)

ON Semiconductor's overall stock score reflects a stable financial foundation with strong operational efficiency, but challenges in revenue and profit margin declines. Technical indicators suggest weak momentum, and a high P/E ratio indicates potential overvaluation. The earnings call highlights promising strategic initiatives but also market challenges. The company is well-positioned but must address these issues to enhance future performance.

Positive Factors

Automotive Performance

Automotive sales outperformed expectations, driven by strength in China, where revenue rose 23% quarter-over-quarter.

Data Center Growth

AI data center revenue nearly doubled year-over-year, with increased engagement from XPU providers.

SiC Technology

SiC wins in data center and China EVs are a bright spot.

Negative Factors

Gross Margin Pressure

Utilization remains a significant gross margin headwind, with 3Q GM guided to be down 10 bps to ~37.5% at the midpoint.

Inventory Challenges

Weeks of channel inventory increased sequentially from 10.1 weeks in 1Q to 10.8, and the additional inventory will need to be unwound, which may be a headwind for future quarters.

Market Caution

Ongoing uncertainty and customer caution is tempering growth outlook with 3Q industrial revenue expected to be up low single digits.

ON Semiconductor Business Overview & Revenue Model

Company Description

ON Semiconductor (ON) is a leading global supplier of semiconductor-based solutions, specializing in the design and manufacture of a wide range of semiconductor products. The company operates across various sectors, including automotive, industrial, communications, consumer electronics, and computing. Its core product offerings include power management solutions, sensors, analog ICs, and discrete components, which enable energy efficiency and connectivity in electronic devices.

How the Company Makes Money

ON Semiconductor generates revenue primarily through the sale of its semiconductor products. The company's revenue model is based on selling integrated circuits, discrete components, and custom solutions to a diverse customer base that spans multiple industries. Key revenue streams include automotive electronics, where ON provides solutions for electric vehicles and advanced driver-assistance systems, as well as industrial applications that require energy-efficient power management and sensing technology. Additionally, ON has established significant partnerships with major technology firms, enhancing its market presence and driving sales through collaborative projects. Factors such as the growing demand for energy-efficient solutions, the expansion of electric vehicles, and advancements in IoT technology contribute to the company's earnings.

ON Semiconductor Financial Statement Overview

Summary

ON Semiconductor shows strong operational efficiency with positive EBIT and EBITDA margins. However, declining revenue and profit margins, along with a reduced return on equity, pose challenges. The balance sheet remains stable with manageable debt, but the negative growth in free cash flow is concerning.

Income Statement

ON Semiconductor's income statement shows a mixed performance. The TTM (Trailing-Twelve-Months) data indicates a decline in revenue and profit margins compared to previous years. The gross profit margin decreased to 37.89% from 45.41% in 2024, and the net profit margin dropped to 7.28% from 22.21%. Revenue growth has been negative, with a -3.998% change in the TTM period. Despite these challenges, the company maintains a positive EBIT and EBITDA margin, indicating operational efficiency. However, the declining trend in revenue and margins poses a risk to future profitability.

Balance Sheet

The balance sheet of ON Semiconductor reflects a stable financial position with a manageable debt-to-equity ratio of 0.42 in the TTM period, which is an improvement from previous years. The return on equity (ROE) has decreased to 5.59% from 17.88% in 2024, indicating a decline in profitability relative to equity. The equity ratio remains healthy, suggesting a strong capital structure. Overall, the balance sheet shows stability, but the reduced ROE highlights potential challenges in generating returns for shareholders.

Cash Flow

The cash flow statement reveals a decline in free cash flow growth, with a -2.252% change in the TTM period. Despite this, the company maintains a strong operating cash flow to net income ratio of 1.45, indicating efficient cash generation from operations. The free cash flow to net income ratio is 0.83, reflecting a solid ability to convert earnings into cash. While cash flow generation remains robust, the negative growth in free cash flow warrants attention.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.40B	7.08B	8.25B	8.33B	6.74B	5.25B
Gross Profit	2.41B	3.22B	3.88B	4.08B	2.71B	1.72B
EBITDA	1.26B	2.54B	3.22B	3.01B	1.88B	970.10M
Net Income	465.80M	1.57B	2.18B	1.90B	1.01B	234.20M
Balance Sheet
Total Assets	13.13B	14.09B	13.22B	11.98B	9.63B	8.67B
Cash, Cash Equivalents and Short-Term Investments	2.83B	2.99B	2.48B	2.92B	1.35B	1.08B
Total Debt	3.37B	3.37B	3.36B	3.23B	3.10B	3.49B
Total Liabilities	5.17B	5.28B	5.41B	5.77B	5.02B	5.11B
Stockholders Equity	7.94B	8.80B	7.78B	6.19B	4.59B	3.54B
Cash Flow
Free Cash Flow	1.51B	1.21B	401.90M	1.60B	1.29B	400.70M
Operating Cash Flow	1.83B	1.91B	1.98B	2.63B	1.78B	884.30M
Investing Cash Flow	-520.20M	-1.01B	-1.74B	-705.40M	-915.10M	-453.60M
Financing Cash Flow	-1.02B	-683.80M	-686.50M	-370.00M	-569.40M	-244.00M

ON Semiconductor Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 49.59
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 49.59 is below the 20-day moving average (MA) of 49.66, below the 50-day MA of 54.05, and below the 200-day MA of 52.04, indicating a bearish trend. The MACD of -0.91 indicates Negative momentum. The RSI at 42.87 is Neutral, neither overbought nor oversold. The STOCH value of 55.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ON.

ON Semiconductor Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NVDA	86 Outperform	$4.23T	49.57	109.42%	0.02%	71.55%	64.54%
UMC	72 Outperform	$16.63B	13.28	10.98%	7.34%	5.46%	-26.72%
ON	69 Neutral	$20.28B	46.27	5.72%	―	-17.93%	-75.83%
STM	68 Neutral	$24.38B	39.35	3.72%	1.13%	-22.97%	-78.58%
ASX	67 Neutral	$21.48B	20.20	10.97%	3.59%	4.86%	6.44%
Sector *	61 Neutral	$35.42B	7.71	-10.08%	1.88%	8.71%	-9.18%
GFS	54 Neutral	$18.46B	28.15	-1.01%	―	-0.65%	-114.26%

ON Semiconductor Corporate Events

ON Semiconductor Holds Annual Stockholders Meeting

On May 15, 2025, ON Semiconductor held its Annual Meeting of Stockholders where eight directors were elected for a one-year term. Additionally, stockholders approved the executive compensation and ratified PricewaterhouseCoopers LLP as the independent auditor for 2025.