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ON Q3 Earnings Beat Estimates, Strong AI Data Center Aids Top Line
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Key Takeaways
ON's Q3 earnings rose 42.9% to 90 cents per share, while revenues increased 11.1% to $1.722 billion.
ON's AI data center revenues surged 175% year over year to $180 million, with further growth expected in 2027.
ON's Q4 revenues are projected between $1.715 billion and $1.815 billion.
ON Semiconductor (ON - Free Report) , popularly known as onsemi, reported third-quarter 2026 non-GAAP earnings of 90 cents per share, up 42.9% year over year and beating the Zacks Consensus Estimate by 2.27%. Stronger demand, favorable product mix and improved manufacturing performance supported bottom-line growth.
Revenues increased 11.1% year over year to $1.722 billion, surpassing the consensus mark of $1.706 billion by 0.94%. AI data center revenues surged 39% sequentially, while improving industrial demand and disciplined execution supported the top line.
ON’s Power Solutions Group Leads Revenue Growth
Power Solutions Group revenues reached $889.9 million, increasing 21% year over year and 7% sequentially. Strengthening demand for differentiated power technologies supported growth across AI data center and industrial applications.
ON Semiconductor Corporation Price, Consensus and EPS Surprise
Analog and Mixed Signal Group revenues increased 2% year over year and 9% sequentially to $597.3 million. Intelligent Sensing Group revenues rose 2% year over year and 3% sequentially to $235.1 million.
ON’s AI Data Center Momentum Accelerates
AI data center revenues reached $180 million, surging 175% year over year. The company now expects approximately $620 million in AI data center revenues for 2026, representing 140% growth, and anticipates another doubling in 2027.
New platform ramps, including shipments to Google, are expanding ON's presence across power supply units and voltage-conversion applications. The transition toward 800-volt data center architectures creates additional opportunities for silicon carbide, silicon MOSFETs and vertical gallium nitride technologies.
The announced acquisition of Ferric for $600 million, plus potential milestone payments of up to $175 million, strengthens onsemi's integrated voltage regulator capabilities. The transaction prompted management to raise its 2030 AI data center revenue target by $500 million to more than $3 billion.
ON's Automotive Business Faces Supply Constraints
Automotive revenues totaled $777 million, declining 1% both sequentially and year over year. The sequential weakness reflected temporary supply reallocation toward faster-growing AI data center and industrial markets rather than deterioration in underlying automotive demand.
ON continues expanding its automotive content through traction inverter, onboard charger and zonal architecture wins. New silicon carbide traction inverter designs at NIO and Geely Zeekr support its position in China's high-voltage electric vehicle market.
Management expects automotive revenues to decline by a high-single-digit percentage sequentially in the fourth quarter. Supply availability should normalize in early 2027, supporting a return to the company's long-term automotive growth trajectory.
ON’s Industrial Business Benefits From Energy Demand
Industrial revenues increased 9% year over year and 10% sequentially to $467 million. Strength in energy infrastructure, factory automation and broader industrial applications drove the improvement.
Growing electricity requirements associated with AI infrastructure are supporting demand for grid modernization and energy storage solutions. The company also expanded hybrid EliteSiC and IGBT module wins with customers including Sungrow and Sineng.
ON expects industrial revenues to increase by a low-double-digit percentage sequentially in the fourth quarter, reflecting continued demand momentum across these applications.
ON Expands Margins Through Mix and Utilization
Non-GAAP gross margin expanded 320 basis points year over year and 190 basis points sequentially to 41.2%. Favorable product mix and manufacturing improvements supported the fifth consecutive quarter of gross margin expansion.
Non-GAAP operating expenses reached $309.5 million compared with $296.8 million in the preceding quarter. Non-GAAP operating margin improved to 23.2% from 19.2% a year earlier and 20.8% sequentially.
Manufacturing utilization remained at 83%. Management expects higher utilization, differentiated product ramps and manufacturing footprint optimization under its Fab Right initiative to support further margin expansion.
onsemi Generates Strong Cash Flow
Cash from operations reached $516.4 million, increasing 23.3% year over year. Free cash flow rose 31% to approximately $489 million, representing 28% of revenues.
Cash and short-term investments totaled approximately $4.4 billion at quarter-end. Total liquidity stood at $5.9 billion, including $1.5 billion available under the revolving credit facility.
Capital expenditures were $27.8 million, while share repurchases totaled approximately $20 million. Management intends to prioritize debt reduction following the planned Synaptics acquisition.
ON’s Q4 Outlook Signals Further Earnings Growth
For the fourth quarter of 2026, ON expects revenues between $1.715 billion and $1.815 billion. The $1.765 billion midpoint implies approximately 2.5% sequential growth.
Non-GAAP gross margin is projected between 41.5% and 43.5%, while non-GAAP operating expenses are expected between $303 million and $318 million.
Non-GAAP earnings are forecast between 95 cents and $1.07 per share. Capital expenditures are projected between $40 million and $50 million.
Management anticipates continued revenue growth and margin expansion into 2027, supported by higher manufacturing utilization, new product ramps and improving demand across key markets.
Forgent Power, Telos and NVIDIA are expected to report their quarterly results on Nov. 12, 9 and 17, respectively. Forgent Power shares have dropped 15.3% year to date (YTD). Telos shares have inched up 2.2% YTD, while NVIDIA shares have climbed 8.4% YTD.
View the Zacks #1 Rank List
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ON Q3 Earnings Beat Estimates, Strong AI Data Center Aids Top Line
Key Takeaways
ON Semiconductor (ON - Free Report) , popularly known as onsemi, reported third-quarter 2026 non-GAAP earnings of 90 cents per share, up 42.9% year over year and beating the Zacks Consensus Estimate by 2.27%. Stronger demand, favorable product mix and improved manufacturing performance supported bottom-line growth.
Revenues increased 11.1% year over year to $1.722 billion, surpassing the consensus mark of $1.706 billion by 0.94%. AI data center revenues surged 39% sequentially, while improving industrial demand and disciplined execution supported the top line.
ON’s Power Solutions Group Leads Revenue Growth
Power Solutions Group revenues reached $889.9 million, increasing 21% year over year and 7% sequentially. Strengthening demand for differentiated power technologies supported growth across AI data center and industrial applications.
ON Semiconductor Corporation Price, Consensus and EPS Surprise
ON Semiconductor Corporation price-consensus-eps-surprise-chart | ON Semiconductor Corporation Quote
Analog and Mixed Signal Group revenues increased 2% year over year and 9% sequentially to $597.3 million. Intelligent Sensing Group revenues rose 2% year over year and 3% sequentially to $235.1 million.
ON’s AI Data Center Momentum Accelerates
AI data center revenues reached $180 million, surging 175% year over year. The company now expects approximately $620 million in AI data center revenues for 2026, representing 140% growth, and anticipates another doubling in 2027.
New platform ramps, including shipments to Google, are expanding ON's presence across power supply units and voltage-conversion applications. The transition toward 800-volt data center architectures creates additional opportunities for silicon carbide, silicon MOSFETs and vertical gallium nitride technologies.
The announced acquisition of Ferric for $600 million, plus potential milestone payments of up to $175 million, strengthens onsemi's integrated voltage regulator capabilities. The transaction prompted management to raise its 2030 AI data center revenue target by $500 million to more than $3 billion.
ON's Automotive Business Faces Supply Constraints
Automotive revenues totaled $777 million, declining 1% both sequentially and year over year. The sequential weakness reflected temporary supply reallocation toward faster-growing AI data center and industrial markets rather than deterioration in underlying automotive demand.
ON continues expanding its automotive content through traction inverter, onboard charger and zonal architecture wins. New silicon carbide traction inverter designs at NIO and Geely Zeekr support its position in China's high-voltage electric vehicle market.
Management expects automotive revenues to decline by a high-single-digit percentage sequentially in the fourth quarter. Supply availability should normalize in early 2027, supporting a return to the company's long-term automotive growth trajectory.
ON’s Industrial Business Benefits From Energy Demand
Industrial revenues increased 9% year over year and 10% sequentially to $467 million. Strength in energy infrastructure, factory automation and broader industrial applications drove the improvement.
Growing electricity requirements associated with AI infrastructure are supporting demand for grid modernization and energy storage solutions. The company also expanded hybrid EliteSiC and IGBT module wins with customers including Sungrow and Sineng.
ON expects industrial revenues to increase by a low-double-digit percentage sequentially in the fourth quarter, reflecting continued demand momentum across these applications.
ON Expands Margins Through Mix and Utilization
Non-GAAP gross margin expanded 320 basis points year over year and 190 basis points sequentially to 41.2%. Favorable product mix and manufacturing improvements supported the fifth consecutive quarter of gross margin expansion.
Non-GAAP operating expenses reached $309.5 million compared with $296.8 million in the preceding quarter. Non-GAAP operating margin improved to 23.2% from 19.2% a year earlier and 20.8% sequentially.
Manufacturing utilization remained at 83%. Management expects higher utilization, differentiated product ramps and manufacturing footprint optimization under its Fab Right initiative to support further margin expansion.
onsemi Generates Strong Cash Flow
Cash from operations reached $516.4 million, increasing 23.3% year over year. Free cash flow rose 31% to approximately $489 million, representing 28% of revenues.
Cash and short-term investments totaled approximately $4.4 billion at quarter-end. Total liquidity stood at $5.9 billion, including $1.5 billion available under the revolving credit facility.
Capital expenditures were $27.8 million, while share repurchases totaled approximately $20 million. Management intends to prioritize debt reduction following the planned Synaptics acquisition.
ON’s Q4 Outlook Signals Further Earnings Growth
For the fourth quarter of 2026, ON expects revenues between $1.715 billion and $1.815 billion. The $1.765 billion midpoint implies approximately 2.5% sequential growth.
Non-GAAP gross margin is projected between 41.5% and 43.5%, while non-GAAP operating expenses are expected between $303 million and $318 million.
Non-GAAP earnings are forecast between 95 cents and $1.07 per share. Capital expenditures are projected between $40 million and $50 million.
Management anticipates continued revenue growth and margin expansion into 2027, supported by higher manufacturing utilization, new product ramps and improving demand across key markets.
Zacks Rank & Upcoming Earnings to Watch For
Currently, ON carries a Zacks Rank #3 (Hold).
Forgent Power Solutions (FPS - Free Report) , Telos (TLS - Free Report) and NVIDIA (NVDA - Free Report) are some other top-ranked stocks in the broader Zacks Computer and Technology sector. While Forgent Power and Telos sport a Zacks Rank #1 (Strong Buy) each at present, NVIDIA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Forgent Power, Telos and NVIDIA are expected to report their quarterly results on Nov. 12, 9 and 17, respectively. Forgent Power shares have dropped 15.3% year to date (YTD). Telos shares have inched up 2.2% YTD, while NVIDIA shares have climbed 8.4% YTD.