ON Semiconductor Corp.
ONON Semiconductor designs and manufactures a broad portfolio of semiconductors and power management solutions for the global technology sector.
It has solidified its identity as a key enabler in the high-growth automotive and industrial end-markets, leveraging its expertise in energy-efficient technologies.
Updated: February 19, 2026, 16:00 EST
Investment Opinion: Should I buy ON Today?
Based on a comprehensive analysis of ON Semiconductor, the stock presents a compelling but high-risk growth opportunity.
Technical Analysis: ON exhibits powerful bullish momentum, significantly outperforming the market over one and three months. However, trading near its 52-week high with a high beta suggests it is susceptible to a pullback, making timing an important consideration.
Fundamentals & Valuation: The fundamentals are solid with strong profitability and a robust, low-debt balance sheet, though operational efficiency could improve. The extreme TTM P/E ratio is a concern, but the more reasonable forward P/E of 29.8 indicates the market is pricing in substantial future earnings growth.
Risk Assessment & Verdict: The primary risk is the stock's high volatility, as reflected in its beta and large historical drawdown. Despite this, the combination of strong momentum, healthy financials, and anticipated earnings growth supports a positive outlook.
Recommendation: BUY. ON is recommended for growth-oriented investors who can tolerate above-average volatility. The stock's momentum and projected earnings normalization justify its premium valuation. Investors should consider a strategic entry point, potentially on market-wide or sector-specific weakness, to mitigate short-term downside risk.
ON 12-Month Price Forecast
RockFlow Model Forecast: Three Scenarios for 2026
Based on a comprehensive analysis, the 12-month outlook for ON Semiconductor (ON) is positive but hinges on the broader semiconductor cycle.
Key Catalysts: The primary driver is the anticipated normalization of earnings, validating the forward P/E multiple. Continued strong demand from the automotive and industrial sectors, where ON has a strategic focus on silicon carbide (SiC) and intelligent power solutions, should support this growth.
Potential Risks: The largest risk is the stock's high volatility and sensitivity to macroeconomic shifts; any signs of slowing industrial production or a pullback in electric vehicle adoption could trigger a significant correction. The premium valuation also leaves little room for earnings disappointments.
Target Price Range: While a specific analyst target was not provided, the positive momentum and solid fundamentals, contingent on earnings growth materializing, suggest potential for appreciation towards the $80-$85 range, though this is highly dependent on market conditions.
Wall Street Consensus
Most Wall Street analysts are optimistic about ON Semiconductor Corp.'s 12-month outlook, with consensus target around $68.09, indicating expected upside potential.
Bulls vs Bears: ON Investment Factors
Overall, ON has investment potential but also faces challenges. Here are key factors to weigh before investing.
Bullish
- Fed Rate Cut Optimism: Lower interest rates expected to boost market growth in 2026.
- Institutional Investor Confidence: Increased institutional attention may signal positive future returns.
- Market Recovery Potential: Recent dips offer buying opportunities ahead of Fed decisions.
Bearish
- AI Sector Concerns: Tech selloff due to resurfacing AI worries hurts semiconductor sentiment.
- Fed Decision Uncertainty: Market volatility persists as investors await Federal Reserve guidance.
- Broad Market Pullback: Communication and consumer stock declines drag down overall indices.
ON Technical Analysis
ON has delivered exceptionally strong performance with substantial gains across multiple timeframes, significantly outpacing the broader market.
The stock has surged 19.38% over one month and 48.59% over three months, dramatically outperforming the market by 48.61% during the latter period, indicating powerful upward momentum. This performance is particularly notable given the stock's high beta of 1.54, suggesting amplified but successful volatility.
Currently trading at $71.96, ON sits just 2.3% below its 52-week high of $73.63 after rallying 132% from its low, positioning it near overbought territory. The substantial 42.68% maximum drawdown over the past year highlights the stock's volatile nature despite its recent strong ascent.
| Period | ON Return | S&P 500 |
|---|---|---|
| 1m | +13.4% | +1.0% |
| 3m | +41.5% | +1.9% |
| 6m | +36.1% | +6.5% |
| 1y | +22.2% | +12.1% |
| ytd | +20.1% | +0.2% |
ON Fundamental Analysis
Revenue & Profitability ON demonstrated a slight sequential revenue contraction from Q3 to Q4 2025, with revenue decreasing from $1.55 billion to $1.53 billion. Profitability metrics softened alongside this, as the net profit margin declined from 16.4% to 11.9%, primarily driven by a lower gross profit margin. Despite the quarterly dip, the company remains solidly profitable.
Financial Health The company maintains a robust balance sheet, evidenced by a very strong current ratio of 4.52 and a low debt ratio of 27.7%, indicating minimal financial leverage. While the cash flow to debt ratio of 0.16 appears modest, a high interest coverage ratio of 14.6 confirms the company can comfortably service its existing debt obligations with operating earnings.
Operational Efficiency Operational efficiency presents a mixed picture, with a relatively low return on equity of 2.4% and an asset turnover of just 0.12, suggesting challenges in generating sales from its asset base. The efficiency is further impacted by a lengthy cash conversion cycle of 184 days, driven by high days of inventory outstanding, which points to potential inventory management inefficiencies.
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Level: ON's current TTM P/E ratio of 229.4 is exceptionally high, signaling potential overvaluation based on recent earnings. However, the forward P/E of 29.8 presents a much more reasonable picture, suggesting that significant earnings growth is anticipated in the coming year. The negative PEG ratio, stemming from this high trailing earnings multiple, highlights the current disconnect between the stock's price and its immediate historical performance.
Peer Comparison: A peer comparison cannot be meaningfully conducted as industry average data is unavailable. Therefore, it is impossible to determine if ON's valuation metrics—such as its forward P/E of 29.8, P/B of 3.69, or EV/EBITDA of 51.2—are high or low relative to its sector. The analysis is limited to an absolute assessment rather than a relative one.
Investment Risk Disclosure
ON exhibits significant volatility risk, with a beta of 1.542 indicating the stock is approximately 54% more volatile than the broader market. This elevated volatility is confirmed by a substantial 1-year maximum drawdown of -42.68%, highlighting pronounced downside risk during market corrections and the potential for sharp declines in shareholder value.
The stock's risk profile is somewhat tempered by the absence of notable short interest, which suggests a lack of concentrated bearish sentiment or immediate pressure from short squeezes. However, other risks such as sector-specific challenges, earnings volatility, or broader market liquidity conditions remain relevant considerations for investors.
FAQs
Neutral to bearish. While ON shows strong technical momentum and a healthy balance sheet, its exceptionally high TTM P/E ratio of 229.4 signals significant overvaluation, and recent quarterly fundamentals have softened. The unanimous Sell rating from analysts and sector volatility driven by AI concerns add near-term risk. This stock may only suit highly risk-tolerant, momentum-focused traders; long-term and value investors should wait for a better valuation entry point.
Based on the available data, ON stock appears overvalued. The valuation is primarily challenged by a very high TTM P/E ratio of 229.4 and a negative PEG ratio of -1.04, suggesting the current price is not justified by recent earnings or earnings growth expectations. While the forward P/E of 29.8 is more reasonable and signals anticipated growth, the exceptionally low return on equity (2.4%) and asset turnover (0.12) indicate poor operational efficiency, which undermines the premium valuation. The stock's valuation seems to be pricing in strong future growth that is not yet reflected in its current fundamental performance.
Based on the provided information, here are the key risks of holding ON stock, ordered by importance:
1. Market Volatility Risk: The stock's high beta of 1.54 makes it significantly more volatile than the broader market, exposing it to sharp declines, as evidenced by its substantial 42.68% maximum drawdown over the past year. 2. Business/Operational Risk: Declining recent profitability, with a net profit margin falling from 16.4% to 11.9%, coupled with a lengthy 184-day cash conversion cycle, indicates potential pressures on earnings and operational inefficiencies in inventory management. 3. Valuation/Pullback Risk: After a 132% rally to trade near its 52-week high, the stock is in potentially overbought territory, increasing its susceptibility to a significant price correction or profit-taking event.
Based on a fundamental analysis of ON Semiconductor's strategic positioning and financials, the 2026 forecast is cautiously optimistic, contingent on execution and market conditions.
* Target Price Range: The base case target for late 2026 is $85 - $95, with a bull case of $100+ if SiC adoption accelerates faster than expected. * Key Growth Drivers: The primary catalysts are: 1) accelerated adoption of silicon carbide (SiC) in electric vehicles and industrial energy infrastructure, 2) sustained high demand for intelligent power solutions within its focused automotive and industrial segments, and 3) improved inventory management to shorten the cash conversion cycle. * Main Assumptions: This forecast assumes a stable semiconductor cycle, no major macroeconomic downturn that curbs industrial and automotive investment, and that ON successfully executes its high-margin product roadmap without significant dilution to profitability. * Uncertainty: The forecast carries high uncertainty due to the stock's inherent volatility, sensitivity to EV adoption rates, and potential for inventory corrections, meaning the actual price could deviate significantly from these targets.