ON Semiconductor Corporation

🇺🇸NASDAQ Global Select
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ON Semiconductor Corporation stock analysis ON overview
Bullish +75

ON Semiconductor: The Rally Still Has Legs

📈 ON Semiconductor recorded its first year-over-year revenue growth in Q1 2026 since the second quarter of 2023.

🤖 Revenue from the AI data center segment more than doubled compared to the same period last year.

🚀 The company's Q2 guidance indicates accelerating growth and profitability with midpoints exceeding analyst consensus for both revenue and EPS.

💰 Despite a forward P/E ratio of 37.39, valuation metrics like forward PEG and 2029 multiples suggest the stock is undervalued.

👍 The author upgrades their rating to "buy" based on the company's strong performance and growth trajectory.

🎓 The analyst holds a Bachelor of Commerce Degree with Distinction in Finance and is a member of Beta Gamma Sigma.

⚠️ The article includes standard disclosures stating the author has no stock position and is not receiving compensation beyond Seeking Alpha.

Bullish Signals
  • ON Semiconductor has reached an inflection point with Q1 2026 marking its first year-over-year revenue growth quarter since Q2 2023.
  • AI data center segment revenue more than doubled year-over-year, positioning the company as a critical enabler in the AI revolution.
  • Q2 guidance signals accelerating growth and profitability with revenue and EPS midpoints trading above analyst consensus.
  • Despite a forward P/E of 37.39, forward PEG and 2029 multiples suggest the stock is undervalued, justifying a buy rating.
Risk Factors
  • The stock trades at a forward P/E ratio of 37.39, which is elevated compared to the undervalued status suggested by forward PEG and 2029 multiples.
  • The analyst previously initiated coverage with a sell rating over a year ago due to the stock not being considered a bargain, indicating prior concerns about valuation or growth sustainability.
Full Analysis
ON Semiconductor (ON) has reached an inflection point with Q1 2026 marking its first year-over-year revenue growth quarter since Q2 2023, driven primarily by a more than doubling of revenue in the AI data center segment. This performance positions the company as a critical enabler in the ongoing AI revolution, while Q2 guidance signals accelerating growth and profitability with revenue and EPS midpoints set above consensus estimates. Despite a forward P/E ratio of 37.39, valuation metrics such as forward PEG and 2029 multiples suggest the stock remains undervalued, leading to a buy rating recommendation. The article notes that this is a significant shift from over a year ago when the analyst initiated coverage with a sell rating due to the stock not being considered a bargain at the time.