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ONTO Stock Grows 174% in a Year: Does it Have More Room to Run?
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Key Takeaways
ONTO topped Q1 expectations and sees 2026 revenue exceeding $1.3 billion on AI-driven demand.
ONTO expects advanced packaging revenue to grow more than 50% in 2026 amid customer wins.
ONTO plans a $710M Rigaku stake investment to expand metrology capabilities and licensing revenue.
Shares of Onto Innovation, Inc. (ONTO - Free Report) have been one of the standout performers in the semiconductor equipment industry, delivering a remarkable 174.2% gain over the past year, outperforming the Zacks Nanotechnology industry’s growth of 171.5%. The company has outpaced the Zacks Computer and Technology sector and the S&P 500 composite’s growth of 42.8% and 26.3%, respectively.
Image Source: Zacks Investment Research
The stock’s impressive rally has been fueled by booming demand for AI infrastructure, advanced semiconductor packaging technologies, and the company’s expanding role in next-generation chip manufacturing. ONTO’s key competitors include KLA Corporation (KLAC - Free Report) , Camtek Ltd (CAMT - Free Report) and Nova Ltd. (NVMI - Free Report) . KLAC, CAMT and NVMI have grown 145.4%, 121.6% and 121%, respectively, in the same time frame.
Onto Innovation is a leading provider of process control, metrology, inspection and software solutions for semiconductor manufacturing. Its technologies help chipmakers improve yields, detect defects and optimize production across advanced logic, memory, advanced packaging, AI and high-performance computing applications. As chip manufacturing grows more complex, demand for Onto's precision tools continues to rise.
With such a strong run already behind it, investors are now asking a critical question: Does ONTO still have room to climb, or has the market already priced in most of the good news?
AI is Creating a Powerful Tailwind for ONTO Stock
Onto Innovation started 2026 strongly, surpassing expectations as demand for AI compute, advanced packaging and semiconductor process technologies continues to grow. First-quarter revenue hit $292 million, nearly 10% up sequentially, while second-quarter guidance of $320–$330 million indicates about 28% year-over-year growth. The company anticipates revenue to increase more than 15% sequentially in the second half of 2026, putting it on track to exceed $1.3 billion for the year. This momentum is fueled by customer expansions, rising adoption of new products and a strengthening order backlog.
Advanced Packaging to Become a Long-Term Growth Engine
ONTO continues to solidify its position in advanced packaging with several key customer wins and technology milestones. It achieved qualification for its Dragonfly G5 system at a leading 2.5D logic customer, with shipments progressing ahead of schedule. Its pipeline now comprises more than 15 applications across more than 10 customers, highlighting broad adoption potential. Advanced packaging revenue is projected to grow more than 50% in 2026, driven by increasing use cases in 2.5D logic, HBM and other advanced packaging technologies. Demand for solutions supporting bumps below six microns in height is rising, especially among OSAT customers, while growing interest in panel-level packaging and heterogeneous integration is expected to lead to a larger production ramp starting in 2027.
Advanced nodes business is also gaining momentum, led by expanding adoption of its Atlas G6 platform and new application opportunities. Following successful customer evaluations, Atlas G6 deployments are increasing across both logic and memory markets. The company also secured a new win in through-silicon via metrology, with shipments expected to begin in the second half of 2026. Growth is being driven by continued investment in advanced logic, improving DRAM demand and an anticipated recovery in the NAND market. As a result, Onto expects its advanced nodes segment to grow approximately 25% in 2026, outperforming broader WFE growth projections in the low-20% range.
Partnerships Strengthen ONTO’s Competitive Position
It is strengthening its partnership with Rigaku Holdings Corporation through a planned $710 million investment for a 27% stake, expected to close in the second half of 2026. Funded primarily with cash on hand, the deal combines Rigaku’s X-ray expertise with ONTO’s optical metrology capabilities, expanding its technology portfolio. The partnership is expected to generate high-margin licensing revenue from Ai Diffract software, drive additional metrology tool sales and provide annual dividend income. Rigaku’s results will not be consolidated into Onto’s financial statements, though unrealized gains and losses from the investment will be reflected in other income.
Moreover, Onto Innovation's strategic investment in hybrid metrology is aimed at expanding its growth opportunities over the next three to six years. While the initiative is not expected to have a meaningful impact on revenue in 2026, it is positioned to create long-term value through potential interest income, high-margin licensing revenue and increased hybrid metrology system sales. Combined with expected dividend income, the investment is designed to strengthen Onto’s technology leadership and significantly broaden its medium- to long-term growth prospects.
Onto Innovation expects second-quarter revenues of $320–$330 million, implying about 10% upside to prior estimates at the midpoint and 28% year-over-year growth. Despite headwinds from higher material and fuel costs, along with increased R&D and service investments, it expects continued margin expansion. While monitoring macro and company-specific cost pressures, Onto remains confident it can expand gross margins by at least 50 basis points in the third and fourth quarters each and exit the year with an operating margin above 30%.
Image Source: Zacks Investment Research
Despite its strong outlook, ONTO is not without risks. The company generates a significant portion of its revenue from large semiconductor manufacturers, making it sensitive to changes in their capital spending plans. Any slowdown in customer investments could affect revenue growth and order trends. Additionally, Onto operates in a highly competitive market alongside larger industry players with greater resources and global reach. To maintain its competitive position, the company must continue investing in innovation and advancing its technology leadership. The company is weighed down by tariffs, mostly from imported components that make up nearly 90% of its costs, along with added pressure from outbound tariffs.
Positive Estimate Revision Trend for ONTO
Earnings estimates for ONTO have moved up for both 2026 and 2027 over the past 60 days.
Image Source: Zacks Investment Research
Valuation Concerns
After rising 174% in a year, the stock now trades at a significantly higher valuation multiple than it did previously. In terms of forward price/earnings, ONTO’s shares are trading at 34.12X, higher than the industry’s 6.6X.
Image Source: Zacks Investment Research
KLAC, CAMT and NVMI are trading at multiples of 43.59X, 47.39X and 48.9X, respectively.
Does ONTO Have More Room to Run?
The company sits at the intersection of multiple powerful trends like AI, advanced packaging demand, HBM, semiconductor process complexity and data center expansion. These trends are likely to continue in the long run. However, as valuations rise, stock performance will increasingly depend on continued earnings growth and successful execution.
For long-term investors seeking exposure to AI-driven semiconductor infrastructure, Onto Innovation remains a compelling bet. The stock may experience periods of volatility following its massive run-up, but its strong competitive position and exposure to some of the industry's fastest-growing segments suggest the company could still have additional room to run over the coming years.
View the Zacks #1 Rank List
Image: Bigstock
ONTO Stock Grows 174% in a Year: Does it Have More Room to Run?
Key Takeaways
Shares of Onto Innovation, Inc. (ONTO - Free Report) have been one of the standout performers in the semiconductor equipment industry, delivering a remarkable 174.2% gain over the past year, outperforming the Zacks Nanotechnology industry’s growth of 171.5%. The company has outpaced the Zacks Computer and Technology sector and the S&P 500 composite’s growth of 42.8% and 26.3%, respectively.
Image Source: Zacks Investment Research
The stock’s impressive rally has been fueled by booming demand for AI infrastructure, advanced semiconductor packaging technologies, and the company’s expanding role in next-generation chip manufacturing. ONTO’s key competitors include KLA Corporation (KLAC - Free Report) , Camtek Ltd (CAMT - Free Report) and Nova Ltd. (NVMI - Free Report) . KLAC, CAMT and NVMI have grown 145.4%, 121.6% and 121%, respectively, in the same time frame.
Onto Innovation is a leading provider of process control, metrology, inspection and software solutions for semiconductor manufacturing. Its technologies help chipmakers improve yields, detect defects and optimize production across advanced logic, memory, advanced packaging, AI and high-performance computing applications. As chip manufacturing grows more complex, demand for Onto's precision tools continues to rise.
With such a strong run already behind it, investors are now asking a critical question: Does ONTO still have room to climb, or has the market already priced in most of the good news?
AI is Creating a Powerful Tailwind for ONTO Stock
Onto Innovation started 2026 strongly, surpassing expectations as demand for AI compute, advanced packaging and semiconductor process technologies continues to grow. First-quarter revenue hit $292 million, nearly 10% up sequentially, while second-quarter guidance of $320–$330 million indicates about 28% year-over-year growth. The company anticipates revenue to increase more than 15% sequentially in the second half of 2026, putting it on track to exceed $1.3 billion for the year. This momentum is fueled by customer expansions, rising adoption of new products and a strengthening order backlog.
Advanced Packaging to Become a Long-Term Growth Engine
ONTO continues to solidify its position in advanced packaging with several key customer wins and technology milestones. It achieved qualification for its Dragonfly G5 system at a leading 2.5D logic customer, with shipments progressing ahead of schedule. Its pipeline now comprises more than 15 applications across more than 10 customers, highlighting broad adoption potential. Advanced packaging revenue is projected to grow more than 50% in 2026, driven by increasing use cases in 2.5D logic, HBM and other advanced packaging technologies. Demand for solutions supporting bumps below six microns in height is rising, especially among OSAT customers, while growing interest in panel-level packaging and heterogeneous integration is expected to lead to a larger production ramp starting in 2027.
Advanced nodes business is also gaining momentum, led by expanding adoption of its Atlas G6 platform and new application opportunities. Following successful customer evaluations, Atlas G6 deployments are increasing across both logic and memory markets. The company also secured a new win in through-silicon via metrology, with shipments expected to begin in the second half of 2026. Growth is being driven by continued investment in advanced logic, improving DRAM demand and an anticipated recovery in the NAND market. As a result, Onto expects its advanced nodes segment to grow approximately 25% in 2026, outperforming broader WFE growth projections in the low-20% range.
Partnerships Strengthen ONTO’s Competitive Position
It is strengthening its partnership with Rigaku Holdings Corporation through a planned $710 million investment for a 27% stake, expected to close in the second half of 2026. Funded primarily with cash on hand, the deal combines Rigaku’s X-ray expertise with ONTO’s optical metrology capabilities, expanding its technology portfolio. The partnership is expected to generate high-margin licensing revenue from Ai Diffract software, drive additional metrology tool sales and provide annual dividend income. Rigaku’s results will not be consolidated into Onto’s financial statements, though unrealized gains and losses from the investment will be reflected in other income.
Moreover, Onto Innovation's strategic investment in hybrid metrology is aimed at expanding its growth opportunities over the next three to six years. While the initiative is not expected to have a meaningful impact on revenue in 2026, it is positioned to create long-term value through potential interest income, high-margin licensing revenue and increased hybrid metrology system sales. Combined with expected dividend income, the investment is designed to strengthen Onto’s technology leadership and significantly broaden its medium- to long-term growth prospects.
Onto Innovation expects second-quarter revenues of $320–$330 million, implying about 10% upside to prior estimates at the midpoint and 28% year-over-year growth. Despite headwinds from higher material and fuel costs, along with increased R&D and service investments, it expects continued margin expansion. While monitoring macro and company-specific cost pressures, Onto remains confident it can expand gross margins by at least 50 basis points in the third and fourth quarters each and exit the year with an operating margin above 30%.
Image Source: Zacks Investment Research
Despite its strong outlook, ONTO is not without risks. The company generates a significant portion of its revenue from large semiconductor manufacturers, making it sensitive to changes in their capital spending plans. Any slowdown in customer investments could affect revenue growth and order trends. Additionally, Onto operates in a highly competitive market alongside larger industry players with greater resources and global reach. To maintain its competitive position, the company must continue investing in innovation and advancing its technology leadership. The company is weighed down by tariffs, mostly from imported components that make up nearly 90% of its costs, along with added pressure from outbound tariffs.
Positive Estimate Revision Trend for ONTO
Earnings estimates for ONTO have moved up for both 2026 and 2027 over the past 60 days.
Image Source: Zacks Investment Research
Valuation Concerns
After rising 174% in a year, the stock now trades at a significantly higher valuation multiple than it did previously. In terms of forward price/earnings, ONTO’s shares are trading at 34.12X, higher than the industry’s 6.6X.
Image Source: Zacks Investment Research
KLAC, CAMT and NVMI are trading at multiples of 43.59X, 47.39X and 48.9X, respectively.
Does ONTO Have More Room to Run?
The company sits at the intersection of multiple powerful trends like AI, advanced packaging demand, HBM, semiconductor process complexity and data center expansion. These trends are likely to continue in the long run. However, as valuations rise, stock performance will increasingly depend on continued earnings growth and successful execution.
For long-term investors seeking exposure to AI-driven semiconductor infrastructure, Onto Innovation remains a compelling bet. The stock may experience periods of volatility following its massive run-up, but its strong competitive position and exposure to some of the industry's fastest-growing segments suggest the company could still have additional room to run over the coming years.
Currently boasting a Zacks Rank #1 (Strong Buy), ONTO seems to be a value addition for your portfolio. You can see the complete list of today’s Zacks #1 Rank stocks here.