ON Semiconductor Corporation ON entered 2026 with renewed momentum, fueled by accelerating demand tied to artificial intelligence infrastructure and improving conditions across key end markets. The company’s first-quarter results reflected a meaningful turnaround, with revenues and earnings surpassing guidance as AI data center demand expanded faster than management initially expected.
A major driver of the rebound has been ON’s growing exposure to the AI power ecosystem. Management noted that AI data center revenues climbed more than 30% sequentially in the first quarter and are now projected to double year over year in 2026. The company is benefiting from broader adoption of its power management technologies across hyperscalers, GPUs, CPUs and high-voltage infrastructure applications. ON’s broad portfolio, spanning silicon carbide, intelligent power modules, mixed-signal solutions and next-generation GaN products, positions it to capitalize on rising power density requirements inside AI servers and data centers.
Beyond AI, ON is also seeing recovery signs in automotive and industrial markets. China EV demand remains particularly strong, while new wins tied to zonal vehicle architectures and silicon carbide platforms are supporting content growth per vehicle. Meanwhile, industrial demand linked to energy storage and microgrids is strengthening alongside the AI-driven expansion of power infrastructure.
The bigger question is whether this rebound can persist through the rest of 2026. Management appears confident, citing improving order trends, rising lead times and stronger customer visibility. Gross margins have also improved for three straight quarters, supported by portfolio optimization and cost controls. While macroeconomic uncertainty and uneven automotive recovery remain risks, ON’s increasing exposure to high-growth AI and power-efficiency markets could help sustain its recovery momentum through 2026.
Competition in AI Power Semiconductors Intensifies
While ON Semiconductor is strengthening its position in AI-driven power solutions, competition in the market remains fierce. One of ON’s key rivals is Infineon Technologies AG IFNNY, which has been aggressively expanding its AI data-center exposure. Infineon recently highlighted robust demand for AI-related power semiconductors and expects strong growth from applications tied to hyperscale computing, power conversion and energy-efficient infrastructure. The company’s leadership in silicon carbide and automotive power chips places it in direct competition with ON across EVs, industrial automation and AI infrastructure.
Another notable competitor is Wolfspeed, Inc. WOLF, a leading silicon carbide specialist. Wolfspeed remains heavily focused on wide-bandgap semiconductor technologies that are increasingly critical for AI servers, energy storage systems and next-generation EV architectures. As AI workloads increase power density requirements, demand for efficient SiC- and GaN-based solutions is expected to rise sharply.
Despite the competitive landscape, ON’s diversified portfolio, growing AI customer engagements and improving margin profile position it favorably to sustain the AI-led rebound through 2026.
ON Price Performance, Valuation & Estimates
Shares of ON Semiconductor gained 117.9% over the past six months compared with the industry’s 71.2% rise.
ON’s One-Year Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ON trades at a forward price-to-earnings (P/E) multiple of 32.01, down from the industry’s average of 36.74.
ON’s P/E Ratio (Forward 12-Month) vs. Industry
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The Zacks Consensus Estimate for ON’s fiscal 2026 earnings per share has increased in the past 30 days.
The company is likely to report strong earnings, with projections indicating a 28.9% year over year rise in 2026.
Image Source: Zacks Investment Research
ON Semiconductor currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).