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ON Q1 Earnings Beat Estimates, Power-Driven Demand Aids Top Line
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Key Takeaways
ON topped Q1 forecasts: revenue $1.513B ( 4.7% y/y) and non-GAAP EPS $0.64 ( 16% y/y).
Accelerating AI data center demand is lifting higher-value power programs as orders improve.
ON bought back $345.7M stock and guided Q2 revenue $1.535-$1.635B with non-GAAP EPS $0.65-$0.77.
ON Semiconductor (ON - Free Report) or onsemi delivered solid first-quarter 2026 results as improving demand signals and accelerating AI data center momentum lifted performance. The company reported non-GAAP earnings of 64 cents per share, up 16.4% year over year, beating the Zacks Consensus Estimate by 4.92%.
Revenues rose 4.7% year over year to $1.513 billion, topping the consensus mark by 1.76%.
ON’s Portfolio Mix Benefits From Power-Led Demand
Management emphasized that demand strengthened as the quarter progressed, supported by stronger order patterns and an increase in short lead-time orders. The company also highlighted continued traction from higher-value programs tied to AI infrastructure and advanced automotive power platforms.
ON Semiconductor Corporation Price, Consensus and EPS Surprise
A key narrative was the “inflection point” in AI data center demand, with onsemi describing broader adoption across the power tree spanning multiple chip vendors and leading hyperscalers. That acceleration helped offset softness elsewhere and reinforced the company’s focus on electrification and energy-efficient power conversion.
Robust Power Solutions Aids ON’s Top-Line Growth
The quarterly mix underscored relative strength in Power Solutions Group (PSG), which accounted for 48.7% of revenues. PSG revenues were $736.6 million, up 14.2% year over year and 2% sequentially, reflecting improved demand signals and better positioning in higher-value power applications.
Analog & Mixed-Signal Group revenues were $540.4 million, down 5% year over year and 3% sequentially. Intelligent Sensing Group revenues totaled $236.3 million, up 1% from the year-ago quarter but down 5% from the prior quarter. Management pointed to a market recovery path that is being led by specific application ramps rather than a uniform regional rebound.
ON’s Operating Leverage Shows Up in Expense Discipline
On Semiconductor reported a non-GAAP gross margin of 38.5% in the reported quarter, down 150 basis points (bps).
Cost actions remained a notable theme. Non-GAAP operating expenses were $293.7 million in the quarter, down 7% year over year, reflecting ongoing cost optimization.
That discipline supported profitability despite a still-mixed demand backdrop. Non-GAAP operating margin was 19.1%, up 90 bps year over year. The company also reiterated that its leaner cost structure is designed to deliver operating leverage as volumes recover and higher-margin products ramp.
onsemi Highlights Manufacturing and Inventory Dynamics
Operationally, onsemi noted improved manufacturing execution as it responded to strengthening demand signals. Manufacturing utilization increased sequentially to 77% as production ramped during the reported quarter, with expectations for utilization to be flat to slightly higher in the second quarter.
Balance sheet metrics reflected targeted inventory positioning. Inventory increased to 201 days from 192 days in the prior quarter, a move attributed to higher internal loadings and customer commitments. The company also disclosed that strategic inventory stood at 75 days (down from 76 days), with base inventory at 126 days excluding strategic builds, while distribution inventory was flat at 10.8 weeks.
ON’s Cash Returns Stand Out Alongside Solid Liquidity
Capital returns remained aggressive. The company repurchased $345.7 million of shares during the quarter at an average price of $60.54, a level management characterized as opportunistic relative to free cash flow generation.
Liquidity stayed sizable, with cash and short-term investments of approximately $2.4 billion and total liquidity of $3.9 billion, including $1.5 billion available on its revolver.
Cash from operations was $239.1 million and free cash flow was $217.2 million, reflecting continued cash generation alongside modest capital spending.
onsemi’s Q2 View Points to Sequential Upside
For the second quarter of 2026, onsemi guided revenues of $1.535-$1.635 billion. The company expects non-GAAP earnings in the range of 65-77 cents, with non-GAAP gross margin projected at 38-40% and non-GAAP operating expenses of $287-$302 million.
Management also discussed planned noncore revenue exits continuing into the second quarter, while expressing confidence that improving visibility and strengthening order patterns support a recovery trajectory. In addition, leadership reiterated expectations that AI data center revenue will double year over year in 2026, reflecting expanding customer engagement across the power tree and broader program ramps.
Zacks Rank & Other Stocks to Consider
Currently, On Semiconductor has a Zacks Rank #2 (Buy).
Diodes, Docebo and Keysight Technologies are set to report their quarterly results on May 7, 8 and 19, respectively. Year to date, shares of Diodes and Keysight Technologies have jumped 120.3% and 72.9%, respectively, while Docebo has dropped 4.5%.
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ON Q1 Earnings Beat Estimates, Power-Driven Demand Aids Top Line
Key Takeaways
ON Semiconductor (ON - Free Report) or onsemi delivered solid first-quarter 2026 results as improving demand signals and accelerating AI data center momentum lifted performance. The company reported non-GAAP earnings of 64 cents per share, up 16.4% year over year, beating the Zacks Consensus Estimate by 4.92%.
Revenues rose 4.7% year over year to $1.513 billion, topping the consensus mark by 1.76%.
ON’s Portfolio Mix Benefits From Power-Led Demand
Management emphasized that demand strengthened as the quarter progressed, supported by stronger order patterns and an increase in short lead-time orders. The company also highlighted continued traction from higher-value programs tied to AI infrastructure and advanced automotive power platforms.
ON Semiconductor Corporation Price, Consensus and EPS Surprise
ON Semiconductor Corporation price-consensus-eps-surprise-chart | ON Semiconductor Corporation Quote
A key narrative was the “inflection point” in AI data center demand, with onsemi describing broader adoption across the power tree spanning multiple chip vendors and leading hyperscalers. That acceleration helped offset softness elsewhere and reinforced the company’s focus on electrification and energy-efficient power conversion.
Robust Power Solutions Aids ON’s Top-Line Growth
The quarterly mix underscored relative strength in Power Solutions Group (PSG), which accounted for 48.7% of revenues. PSG revenues were $736.6 million, up 14.2% year over year and 2% sequentially, reflecting improved demand signals and better positioning in higher-value power applications.
Analog & Mixed-Signal Group revenues were $540.4 million, down 5% year over year and 3% sequentially. Intelligent Sensing Group revenues totaled $236.3 million, up 1% from the year-ago quarter but down 5% from the prior quarter. Management pointed to a market recovery path that is being led by specific application ramps rather than a uniform regional rebound.
ON’s Operating Leverage Shows Up in Expense Discipline
On Semiconductor reported a non-GAAP gross margin of 38.5% in the reported quarter, down 150 basis points (bps).
Cost actions remained a notable theme. Non-GAAP operating expenses were $293.7 million in the quarter, down 7% year over year, reflecting ongoing cost optimization.
That discipline supported profitability despite a still-mixed demand backdrop. Non-GAAP operating margin was 19.1%, up 90 bps year over year. The company also reiterated that its leaner cost structure is designed to deliver operating leverage as volumes recover and higher-margin products ramp.
onsemi Highlights Manufacturing and Inventory Dynamics
Operationally, onsemi noted improved manufacturing execution as it responded to strengthening demand signals. Manufacturing utilization increased sequentially to 77% as production ramped during the reported quarter, with expectations for utilization to be flat to slightly higher in the second quarter.
Balance sheet metrics reflected targeted inventory positioning. Inventory increased to 201 days from 192 days in the prior quarter, a move attributed to higher internal loadings and customer commitments. The company also disclosed that strategic inventory stood at 75 days (down from 76 days), with base inventory at 126 days excluding strategic builds, while distribution inventory was flat at 10.8 weeks.
ON’s Cash Returns Stand Out Alongside Solid Liquidity
Capital returns remained aggressive. The company repurchased $345.7 million of shares during the quarter at an average price of $60.54, a level management characterized as opportunistic relative to free cash flow generation.
Liquidity stayed sizable, with cash and short-term investments of approximately $2.4 billion and total liquidity of $3.9 billion, including $1.5 billion available on its revolver.
Cash from operations was $239.1 million and free cash flow was $217.2 million, reflecting continued cash generation alongside modest capital spending.
onsemi’s Q2 View Points to Sequential Upside
For the second quarter of 2026, onsemi guided revenues of $1.535-$1.635 billion. The company expects non-GAAP earnings in the range of 65-77 cents, with non-GAAP gross margin projected at 38-40% and non-GAAP operating expenses of $287-$302 million.
Management also discussed planned noncore revenue exits continuing into the second quarter, while expressing confidence that improving visibility and strengthening order patterns support a recovery trajectory. In addition, leadership reiterated expectations that AI data center revenue will double year over year in 2026, reflecting expanding customer engagement across the power tree and broader program ramps.
Zacks Rank & Other Stocks to Consider
Currently, On Semiconductor has a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector that are set to report their quarterly results are Docebo (DCBO - Free Report) , Diodes (DIOD - Free Report) and Keysight Technologies (KEYS - Free Report) . Each of the three stocks carries a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Diodes, Docebo and Keysight Technologies are set to report their quarterly results on May 7, 8 and 19, respectively. Year to date, shares of Diodes and Keysight Technologies have jumped 120.3% and 72.9%, respectively, while Docebo has dropped 4.5%.