We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Onto Innovation Likely to Beat on Q1 Earnings: Buy the Stock Now?
Read MoreHide Full Article
Key Takeaways
ONTO will report Q1 2026 earnings on May 5, guiding non-GAAP EPS of $1.26-$1.36.
Onto Innovation sees growth from AI demand, Dragonfly deals and advanced packaging momentum.
ONTO backlog hit record levels, while margins and revenue are expected to rise through 2026.
Onto Innovation (ONTO - Free Report) is set to report earnings for the first quarter of 2026 on May 5, after the closing bell.
The Zacks Consensus Estimate for first-quarter earnings per share (EPS) is pinned at $1.38, suggesting a fall of 8.6% from the year-ago quarter’s figure. The company expects non-GAAP EPS between $1.26 and $1.36.
The consensus mark for revenues is pegged at $289.1 million, indicating an 8.4% rise from the year-earlier quarter’s actuals.
ONTO’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, while missing in the remaining, with the average surprise being 1.3%.
Image Source: Zacks Investment Research
ONTO’s Earnings Whispers
Our proven model predicts an earnings beat for Onto Innovation this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is exactly the case here.
Earnings ESP: ONTO has an Earnings ESP of +1.63%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Strong demand in AI and advanced packaging, coupled with the Dragonfly platform’s momentum, supported by more than $240 million in deals with a leading HBM manufacturer, is likely to have driven Onto Innovation’s growth in the first quarter. With momentum in both advanced packaging and advanced nodes, first-quarter revenue is projected to be $275–$285 million, with the second quarter expected to surpass $300 million, marking a core business acceleration of roughly 12–14% growth in the first half of 2026 compared to the second half of 2025.
Dragonfly is becoming a key growth driver for Onto, supported by more than $240 million in HBM deals through 2027 (including more than $60 million for 3D systems), directly connecting it to AI infrastructure demand. Its 3Di pipeline is expanding beyond HBM with new advanced packaging orders, while JetStep and Firefly wins support large panel facilities, positioning the company for more than 30% growth in advanced packaging revenue and a record in 2026. Additionally, Onto’s expanded Asian factories are ramping up well. More than 30% of third-quarter tools were shipped from these sites, with capacity expected to surpass 60% of total production by the first quarter of 2026. These initiatives strengthen competitiveness, reduce tariff exposure, improve flexibility and support gross margin growth next year.
Onto’s backlog has nearly doubled to a record of about two quarters, reinforcing growth visibility, with further gains expected in the second half as it works with customers and suppliers to navigate tightening capacity and longer lead times. It is focused on driving higher revenue and achieving a significant uplift in gross and operating margins in 2026, with margins expected to expand steadily each quarter this year. At the midpoint of its revenue guidance, it expects gross margin to improve about 50 basis points sequentially, driven by tariff mitigation efforts and a higher volume of shipments from its expanded manufacturing footprint. Gross margin is projected at 54.6-55.6%.
Operating expenses are projected to be around $80 million, reflecting a full quarter of Semilab-related costs, while non-GAAP operating margin is expected to rise to 25.5–26.5%. GAAP operating margin is expected at 14.2-15.6%. GAAP earnings per share are expected to range from 74 cents to 84 cents. We expect non-GAAP operating margin, GAAP operating margin and GAAP earnings per share at 26.5%, 14.7% and 75 cents per share, respectively.
Image Source: Zacks Investment Research
ONTO maintains a strong balance sheet and ample liquidity. It generated a record $95 million in cash from operations in the fourth quarter, with a cash conversion rate of 150% of non-GAAP net income. This robust liquidity provides flexibility to fund R&D, pursue further acquisitions and navigate industry cycles. In a capital-heavy industry like semiconductors, this offers a significant advantage. We anticipate it to generate $60 million in operating cash and $47 million in free cash flow for the first quarter of 2026.
Despite strength in specialty devices and advanced packaging, Onto’s power semiconductor revenue is likely to have softened, with a seasonal decline expected in the first quarter after a strong fourth quarter. The company operates in a capital-intensive semiconductor device manufacturing industry. It is highly exposed to geopolitical risks, especially in Asia. Rising tensions between China and Taiwan, or broader instability in China, Japan, or South Korea, could severely affect operations, especially since Onto relies heavily on major customers in these regions like TSMC, Samsung and Toshiba. Any disruption or slowdown here could significantly harm its revenue and cash flow. Management highlighted supply chain limitations, especially in precision optics, as a key challenge.
Key Recent Developments
Recently, Onto partnered with X-ray leader Rigaku to develop next-gen process control solutions, combining its AI Diffract software with Rigaku’s CD-SAXS platforms. As advanced nodes and packaging drive demand for novel materials and metrology, this collaboration expands Onto’s capabilities beyond OCD into X-ray. The solution has already been adopted by two key customers and targets a market expected to exceed $1 billion within five years, creating incremental growth opportunities.
In April, Onto Innovation successfully qualified its newly launched Dragonfly G5 platform for both new and existing 2.5D advanced packaging applications, with shipments set to begin in June. The system features proprietary optics, enhanced illumination and advanced algorithms, boosting visibility and throughput while lowering the overall cost of ownership.
In March 2026, Onto Innovation launched the Dragonfly G5, a next-generation inspection and metrology system offering industry-leading throughput and sensitivity to detect defects as small as 150nm, with scalability for future front-end and advanced packaging technologies.
ONTO Stock vs. Industry
ONTO’s shares have soared 38.7% in the past month, outperforming the Zacks Nanotechnology industry’s growth of 37.3%. The company has also outpaced the Zacks Computer and Technology sector and the S&P 500 composite’s growth of 17.2% and 9.9%, respectively.
Image Source: Zacks Investment Research
ONTO’s key competitors include KLA Corporation (KLAC - Free Report) , Camtek Ltd (CAMT - Free Report) and Applied Materials (AMAT - Free Report) . KLAC, CAMT and AMAT have grown 23.3%, 23.9% and 11.9%, respectively, in the same time frame.
ONTO’s Valuation
In terms of forward price/earnings, ONTO’s shares are trading at 38.9X, higher than the industry’s 7.62X.
Image Source: Zacks Investment Research
KLAC, CAMT and AMAT are trading at multiples of 39.79X, 55.59X and 30.47X, respectively.
Final Verdict: Should You Buy ONTO Before Q1 Earnings?
Onto Innovation is a high-quality semiconductor play with strong growth potential. Buying ONTO ahead of earnings depends on your approach. It makes sense to step in now if you seem confident in the long-term AI and semiconductor growth story and can handle near-term volatility, especially if you expect an earnings beat. More cautious investors may prefer to wait for confirmation or a better entry point, given valuation concerns. A balanced approach would be to build the position gradually or look for a post-earnings pullback.
The stock appears to be a smart choice now for growth investors betting on semiconductors.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
Onto Innovation Likely to Beat on Q1 Earnings: Buy the Stock Now?
Key Takeaways
Onto Innovation (ONTO - Free Report) is set to report earnings for the first quarter of 2026 on May 5, after the closing bell.
The Zacks Consensus Estimate for first-quarter earnings per share (EPS) is pinned at $1.38, suggesting a fall of 8.6% from the year-ago quarter’s figure. The company expects non-GAAP EPS between $1.26 and $1.36.
The consensus mark for revenues is pegged at $289.1 million, indicating an 8.4% rise from the year-earlier quarter’s actuals.
ONTO’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, while missing in the remaining, with the average surprise being 1.3%.
Image Source: Zacks Investment Research
ONTO’s Earnings Whispers
Our proven model predicts an earnings beat for Onto Innovation this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is exactly the case here.
Earnings ESP: ONTO has an Earnings ESP of +1.63%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: ONTO currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Note for ONTO Going Into Q1 Earnings
Strong demand in AI and advanced packaging, coupled with the Dragonfly platform’s momentum, supported by more than $240 million in deals with a leading HBM manufacturer, is likely to have driven Onto Innovation’s growth in the first quarter. With momentum in both advanced packaging and advanced nodes, first-quarter revenue is projected to be $275–$285 million, with the second quarter expected to surpass $300 million, marking a core business acceleration of roughly 12–14% growth in the first half of 2026 compared to the second half of 2025.
Dragonfly is becoming a key growth driver for Onto, supported by more than $240 million in HBM deals through 2027 (including more than $60 million for 3D systems), directly connecting it to AI infrastructure demand. Its 3Di pipeline is expanding beyond HBM with new advanced packaging orders, while JetStep and Firefly wins support large panel facilities, positioning the company for more than 30% growth in advanced packaging revenue and a record in 2026. Additionally, Onto’s expanded Asian factories are ramping up well. More than 30% of third-quarter tools were shipped from these sites, with capacity expected to surpass 60% of total production by the first quarter of 2026. These initiatives strengthen competitiveness, reduce tariff exposure, improve flexibility and support gross margin growth next year.
Onto’s backlog has nearly doubled to a record of about two quarters, reinforcing growth visibility, with further gains expected in the second half as it works with customers and suppliers to navigate tightening capacity and longer lead times. It is focused on driving higher revenue and achieving a significant uplift in gross and operating margins in 2026, with margins expected to expand steadily each quarter this year. At the midpoint of its revenue guidance, it expects gross margin to improve about 50 basis points sequentially, driven by tariff mitigation efforts and a higher volume of shipments from its expanded manufacturing footprint. Gross margin is projected at 54.6-55.6%.
Operating expenses are projected to be around $80 million, reflecting a full quarter of Semilab-related costs, while non-GAAP operating margin is expected to rise to 25.5–26.5%. GAAP operating margin is expected at 14.2-15.6%. GAAP earnings per share are expected to range from 74 cents to 84 cents. We expect non-GAAP operating margin, GAAP operating margin and GAAP earnings per share at 26.5%, 14.7% and 75 cents per share, respectively.
Image Source: Zacks Investment Research
ONTO maintains a strong balance sheet and ample liquidity. It generated a record $95 million in cash from operations in the fourth quarter, with a cash conversion rate of 150% of non-GAAP net income. This robust liquidity provides flexibility to fund R&D, pursue further acquisitions and navigate industry cycles. In a capital-heavy industry like semiconductors, this offers a significant advantage. We anticipate it to generate $60 million in operating cash and $47 million in free cash flow for the first quarter of 2026.
Despite strength in specialty devices and advanced packaging, Onto’s power semiconductor revenue is likely to have softened, with a seasonal decline expected in the first quarter after a strong fourth quarter. The company operates in a capital-intensive semiconductor device manufacturing industry. It is highly exposed to geopolitical risks, especially in Asia. Rising tensions between China and Taiwan, or broader instability in China, Japan, or South Korea, could severely affect operations, especially since Onto relies heavily on major customers in these regions like TSMC, Samsung and Toshiba. Any disruption or slowdown here could significantly harm its revenue and cash flow. Management highlighted supply chain limitations, especially in precision optics, as a key challenge.
Key Recent Developments
Recently, Onto partnered with X-ray leader Rigaku to develop next-gen process control solutions, combining its AI Diffract software with Rigaku’s CD-SAXS platforms. As advanced nodes and packaging drive demand for novel materials and metrology, this collaboration expands Onto’s capabilities beyond OCD into X-ray. The solution has already been adopted by two key customers and targets a market expected to exceed $1 billion within five years, creating incremental growth opportunities.
In April, Onto Innovation successfully qualified its newly launched Dragonfly G5 platform for both new and existing 2.5D advanced packaging applications, with shipments set to begin in June. The system features proprietary optics, enhanced illumination and advanced algorithms, boosting visibility and throughput while lowering the overall cost of ownership.
In March 2026, Onto Innovation launched the Dragonfly G5, a next-generation inspection and metrology system offering industry-leading throughput and sensitivity to detect defects as small as 150nm, with scalability for future front-end and advanced packaging technologies.
ONTO Stock vs. Industry
ONTO’s shares have soared 38.7% in the past month, outperforming the Zacks Nanotechnology industry’s growth of 37.3%. The company has also outpaced the Zacks Computer and Technology sector and the S&P 500 composite’s growth of 17.2% and 9.9%, respectively.
Image Source: Zacks Investment Research
ONTO’s key competitors include KLA Corporation (KLAC - Free Report) , Camtek Ltd (CAMT - Free Report) and Applied Materials (AMAT - Free Report) . KLAC, CAMT and AMAT have grown 23.3%, 23.9% and 11.9%, respectively, in the same time frame.
ONTO’s Valuation
In terms of forward price/earnings, ONTO’s shares are trading at 38.9X, higher than the industry’s 7.62X.
Image Source: Zacks Investment Research
KLAC, CAMT and AMAT are trading at multiples of 39.79X, 55.59X and 30.47X, respectively.
Final Verdict: Should You Buy ONTO Before Q1 Earnings?
Onto Innovation is a high-quality semiconductor play with strong growth potential. Buying ONTO ahead of earnings depends on your approach. It makes sense to step in now if you seem confident in the long-term AI and semiconductor growth story and can handle near-term volatility, especially if you expect an earnings beat. More cautious investors may prefer to wait for confirmation or a better entry point, given valuation concerns. A balanced approach would be to build the position gradually or look for a post-earnings pullback.
The stock appears to be a smart choice now for growth investors betting on semiconductors.