ON Semiconductor Posts 2Q Growth On AI Data Center Strength; Visibility Extends Into 2007

Shares of ON Semiconductor Corp (NASDAQ: ON ) rose in early trading on Tuesday, after the company reported upbeat second-quarter results.

Here are the key analyst takeaways: Needham analyst Quinn Bolton reiterated a Buy rating, while cutting the price target from $130 to $116.

Rosenblatt Securities analyst Kevin Cassidy maintained a Neutral rating and price target of $85.

JPMorgan analyst Harlan Sur does not have a rating on the stock.

Check out other analyst stock ratings.

Needham: ON Semiconductor delivered a beat-and-raise quarter, driven by strength in its AI data center business.

Bolton highlighted the following: Demand signals continue to improve, with management citing strengthening order activity in battery electric vehicles (BEVs), energy infrastructure, medical, and industrial.

The book-to-bill ratio (B:B) has remained "meaningfully" above 1 for several consecutive quarters and continues to strengthen.

Visibility into the company’s performance has extended into 2027, while some customers are placing orders for 2028 to secure supply.

Lead times have extended, from around 27 weeks to 32 weeks across the portfolio. "A second round of price increases is being implemented to offset rising input costs, and should be a tailwind over the next several quarters," the analyst wrote.

The company expects gross margins to expand sequentially through 2026 due to better utilization and improving demand.

Rosenblatt Securities: ON Semiconductor’s revenue grew 6% sequentially and 9.2% year-on-year to $1.6 billion.

Non-GAAP gross margin expanded to 39.3%, beating consensus estimates of $1.59 billion and 39.1%, respectively.

Non-GAAP earnings grew 15.6% sequentially and 39.6% year-on-year to 74 cents per share, surpassing expectations of 71 cents per share, Cassidy said.

Management guided to third-quarter revenue of $1.70 billion at the midpoint and non-GAAP gross margin of 41%.

That’s above consensus estimates of $1.67 billion and 40.3%, respectively. "Data Center-related revenue is expected to double in Y/Y in 2026," he further wrote.

JPMorgan: ON Semiconductor’s second-quarter results and third-quarter guidance highlight the company’s "strengthening earnings trajectory as the cyclical recovery combines with structural tailwinds from AI data center content growth and Fab Right manufacturing rationalization," Sur wrote.

ON Semiconductor’s earnings growth in the second quarter was around 4.2 times its year-on-year revenue growth, "a strong demonstration of the operating leverage" in the company’s business model, the analyst stated.

Management’s third-quarter guidance implies continued sequential acceleration in revenue, gross margin and earnings growth, he added.

ON Price Action: Shares of ON Semiconductor had risen by 0.88% to $81.11 at the time of publication on Tuesday.

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