On Semiconductor's $6B Capitulation Is Here
Summarize this article with:
Uttam Dey4.9K FollowersFollow5ShareSavePlay(9min)CommentsSummaryOn Semiconductor (ON) is rated Buy, with 25% upside and a $69 price target, supported by operational improvements and a $6B share buyback.Stabilization in automotive and industrial segments, along with recovering inventory and factory utilization, signal a turning point for ON’s fundamentals.ON’s entry into AI data center power management, including a partnership with Nvidia, adds secular growth potential beyond auto and industrial markets.The $6B buyback—26% of market cap—demonstrates management’s confidence and should materially boost EPS through 2027. Pakorn Supajitsoontorn/iStock via Getty Images Investment Thesis After staging an impressive recovery from its Q1 bottom this year, the rally in shares of On Semiconductor (NASDAQ:ON) fizzled in Q2; that was before On Semi’s management announced the massive $6B shareThis article was written byUttam Dey4.9K FollowersFollowUttam is a growth-oriented investment analyst whose equity research primarily focuses on the technology sector. Semiconductors, Artificial Intelligence and Cloud software are some of the key sectors that are regularly researched and published by him. His research also focuses on other areas such as MedTech, Defense Tech, and Renewable Energy. In addition, Uttam also authors The Pragmatic Optimist Newsletter along with his wife, Amrita Roy, who is also an author on the newsletter as well as on this platform. Their newsletter gets regularly cited by leading publications such as the Wall Street Journal, Forbes, etc. Prior to publishing his research, Uttam worked in Silicon Valley, leading teams for some of the largest technology firms in the world, including Apple and Google.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow does ON’s $6B buyback impact its investment case?The $6B buyback, equal to 26.4% of market cap, boosts EPS growth through 2027 and signals management’s confidence in operational recovery and end-market stabilization.What are the key operational metrics supporting ON’s turnaround?Stabilizing inventory levels, improved factory utilization (up to 74% in Q3), and steady gross margins (37–38%) support ON’s recovery and margin expansion thesis.How does ON’s AI data center strategy affect its growth outlook?ON’s entry into AI data center power management, including an 800V solution partnership with Nvidia, offers new secular tailwinds and diversifies growth beyond automotive.Recommended For You