Should You Buy, Sell or Hold onsemi Stock Before Q2 Earnings?

On Semiconductor ON or onsemi is set to report its second-quarter 2026 results on Aug. 3.

The company expects second-quarter 2026 earnings between 65 cents per share and 77 cents per share. The Zacks Consensus Estimate for second-quarter 2026 earnings has increased by a penny to 72 cents per share over the past 30 days, suggesting 35.85% growth from the figure reported in the year-ago quarter.

onsemi expects second-quarter 2026 revenues between $1.535 billion and $1.635 billion. The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.59 billion, indicating an increase of 7.99% from the figure reported in the year-ago quarter.

Consensus Estimate Trend

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ON’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, the average surprise being 2.83%.

Let’s see how things have shaped up for the upcoming announcement.

Factors to Drive onsemi’s Q2 Results

ON’s second-quarter 2026 results are expected to have benefited from a stabilizing automotive demand environment. The company indicated that customer inventory corrections in automotive are largely behind onsemi, with demand improving sequentially. Higher shipments into electric vehicles (EVs), advanced driver-assistance systems (ADAS), and powertrain applications are likely to have supported second-quarter growth in revenues. ON also expects silicon carbide (SiC) demand to improve as customer inventories normalize.

onsemi noted improving order trends across industrial automation, energy infrastructure and factory automation markets. Continued recovery in industrial demand, combined with replenishment orders from distributors, is expected to have provided a sequential boost to revenues. Moreover, the company continues to benefit from increasing demand for power management solutions supporting AI servers and data centers. ON highlighted growing design wins for high-efficiency power products that address rising AI power requirements, providing an incremental growth driver. 

Higher factory loading and continued execution of the Fab Right manufacturing strategy are expected to have improved gross margin sequentially in the to-be-reported quarter.

Nevertheless, weak EV demand in certain regions and cautious OEM production schedules are expected to have limited revenue growth. Moreover, slow capital spending in the industrial market could have hurt top-line growth. Continued softness in consumer electronics and other non-core markets has been a headwind for ON’s to-be-reported quarter.

ON Shares Beat Sector, Trades at a Premium

onsemi shares have appreciated 45.6% year to date (YTD), outperforming the Zacks Computer and Technology sector’s return of 6.9%. 

ON has outperformed Analog Devices ADI and Microchip MCHP but lagged Texas Instruments TXN YTD. While Texas Instruments shares have returned 56.4%, Analog Devices and Microchip shares have dropped 30.3% and 12%, respectively, over the same time frame.

ON Stock’s Price Performance

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onsemi stock is trading at a premium, as suggested by the Value Score of C. In terms of the forward 12-month price/earnings, ON is trading at 20.85X, higher than the broader sector’s 20.01X, and Microchip’s 20.82X. However, onsemi is trading below Texas Instruments’ and Analog Devices’ multiples of 30.53 and 25.13, respectively.

ON Stock’s Valuation

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ON’s Long-Term Prospects Ride on Strong Portfolio

onsemi continues expanding its SiC portfolio for EV traction inverters, charging infrastructure and renewable energy applications. Rising EV penetration and increasing semiconductor content per vehicle remain significant long-term tailwinds. The continued adoption of ADAS, vehicle electrification, autonomous driving and intelligent power systems is expected to drive sustained demand for onsemi’s power and sensing technologies.

Meanwhile, the rapid expansion of AI data centers is increasing demand for high-efficiency power management solutions, an area where onsemi has been strengthening its product portfolio. The planned acquisition of Synaptics would expand onsemi beyond power and sensing into intelligent edge systems, increasing its total addressable market and strengthening its position in physical AI, edge AI compute, connectivity and human-machine interface solutions.

Moreover, manufacturing optimization through facility divestitures and footprint rationalization is expected to reduce costs and expand ON’s gross margins over time. The company expects approximately $35 million of annual cost savings from the recently announced manufacturing divestitures once fully implemented.

However, stiff competition from the likes of Texas Instruments, Analog Devices, and Microchip Technology, among others, is a significant headwind. Export controls, tariffs, and supply-chain disruptions are noteworthy headwinds.

Conclusion

onsemi’s improving automotive and industrial demand, expanding AI data center opportunity and Fab Right initiatives are encouraging. However, persistent weakness in select EV and consumer markets, competitive pressures and the stock’s premium valuation warrant caution. Investors may prefer to wait for greater clarity on the recovery and margin expansion before taking a position in ON shares.

onsemi currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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