Key Stats for ON Semiconductor Stock
- Current Price: $76.14
- Target Price (Mid): ~$164
- Street Target: ~$107
- Potential Total Return: ~116%
- Annualized IRR: ~20% / year
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What Happened?
ON Semiconductor (ON) closed up 8.51% on September 11, one of its sharpest single sessions of the year, and yet the company did not announce a thing. No earnings, no contract, no upgrade. The stock rode a broad semiconductor rally that lifted a whole basket of chip names together, so the move says more about sector appetite than about anything specific to onsemi.
Shares still sit around $76, well below the $134.92 record high set on June 3, even as the parts of the business investors care about have improved for two straight quarters. The tape is treating ON like a sector proxy while the fundamentals have quietly turned.
A Sector Rally Papered Over a Real Turn in the Business
Strip out the September 11 noise and the last reported quarter was the strongest signal in a while. In Q2 2026, reported August 3, revenue came in at $1.60 billion, up 9.18% year over year and ahead of the $1.59 billion consensus. Adjusted EPS of $0.74 beat the $0.72 estimate. Free cash flow reached $425 million, up sharply from a depressed $106 million a year earlier when the company was scraping the bottom of the cycle. After a 2025 in which revenue fell 15.3%, these are the first numbers that look like a bottom giving way.
Management entered the year promising to double that revenue and has since raised the bar to more than double in 2026. At the Deutsche Bank Technology Conference on August 27, CFO Thad Trent put hard math behind the margin recovery: factory utilization has already climbed from 68% at the end of last year to 83% last quarter, and “every point of utilization is 25 to 30 basis points of gross margin improvement.” That means the full climb back to the 92% level, management calls fully utilized, is worth roughly 650 basis points of gross margin, but most of it is already banked. Only about 9 points of utilization remain from here, so the forward lever is closer to 250 basis points, with a richer product mix layered on top.
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The Technology Moat Investors Are Underwriting
The company sells power silicon across its grid-to-core power tree and is pushing into vertical gallium nitride (GaN), a hard-to-manufacture power technology built at its U.S. fab. CEO Hassane El-Khoury was blunt: “Nobody has been able to deliver a vertical GaN device to date. And by the time they figure it out, they have to work around our patents.” Those parts are sampling in AI data center and automotive boards now, though it is worth being precise: these are customer samples in testing, not yet volume revenue. The second internal engine is Treo, an analog design platform built organically that carries a 60% to 70% gross margin and targets $1 billion of revenue by 2030.
Both efforts explain why management keeps stressing that heavy capital spending is finished. Trent said onsemi runs maintenance-level capital expenditure and would not add capacity until revenue sits about 30% above current levels, which is what converts a recovery into free cash flow. Against peers, ON looks reasonable rather than cheap: it trades at 13.61x NTM EV/EBITDA, below NVIDIA at 14.82x and far below AMD at 38.91x, though under Texas Instruments at 19.05x. For a power-focused analog franchise with an AI kicker and recovering margins, a mid-teens multiple is defensible. The risk underneath it is the cycle: automotive demand is stable but not yet replenishing, and if the AI snapback comes in too steep, El-Khoury warned it could strain supply “worse than the COVID days.”
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TIKR Advanced Model Analysis
- Current Price: $76.14
- Target Price (Mid): ~$164
- Potential Total Return: ~116%
- Annualized IRR: ~20% / year
See analysts’ growth forecasts and price targets for ON Semiconductor stock (It’s free!) >>>
The two revenue drivers carrying that number are the AI-data-center ramp, which management now expects to more than double in 2026, and automotive electrification content, where onsemi has posted a 9.5% five-year revenue CAGR against a flat vehicle market. The margin driver is factory utilization, worth 25 to 30 basis points of gross margin per point recovered, helped by the higher-margin Treo mix. The mid case models revenue growth around 13% annually and net margins expanding toward roughly 26% by the end of the decade.
The upside is a firmer cyclical recovery that pushes utilization toward 92% and lifts gross margin toward 50%. The downside is an automotive recovery that stalls and a data-center ramp too lumpy to fill the fabs, leaving margins stuck in the low 40s. At $76, the market is closer to pricing the downside than the base case.
Conclusion
The next real catalyst is onsemi’s Financial Analyst Day on September 16 at 2:00 PM ET, where management lays out its long-term financial plan. Watch for an explicit 2030 gross margin target and a sized number on the AI-data-center and energy-infrastructure opportunity. A credible path back above 50% gross margin, with utilization and Treo doing the work, would confirm the recovery thesis and argue the stock is mispriced at $76.
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Should You Invest in ON Semiconductor?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
