ON Semiconductor Corporation (NASDAQ:ON) reported quarterly results on Monday that exceeded expectations on both revenue and earnings, while also issuing stronger-than-forecast guidance for the current quarter. Despite this, the stock declined around 4% in premarket trading on Tuesday.
The Arizona-based chipmaker posted first-quarter 2026 earnings of $0.64 per share on revenue of $1.51 billion, ahead of analyst projections of $0.61 per share and $1.49 billion in revenue.
Business Overview and Segment Performance
ON Semiconductor, also known as onsemi, supplies semiconductor components to automotive, industrial and artificial intelligence data center markets. Its product range spans power modules, image sensors, processors, photodetectors, amplifiers and microcontrollers.
The company’s operations are divided into three segments: Power Solutions Group (PSG), Analog and Mixed-Signal Group (AMG), and Intelligent Sensing Group (ISG).
Revenue from PSG rose 14% year-on-year to $736.6 million, while AMG revenue declined 5% to $540.4 million. ISG recorded a 5% increase in sales to $236.3 million.
Gross margin reached 38.5%, improving by 30 basis points compared with the previous quarter.
AI Demand and Recovery Signals
“We exceeded expectations as demand strengthened through the quarter and we have moved beyond the cyclical trough on a path to recovery. Our AI data center business accelerated, growing more than 30% sequentially,” said Hassane El-Khoury.
Outlook Beats Market Expectations
Looking ahead, ON Semiconductor expects second-quarter adjusted earnings of between $0.65 and $0.77 per share, on revenue ranging from $1.535 billion to $1.635 billion. The midpoint of both ranges is above analyst consensus, which stands at $0.67 per share on $1.53 billion in revenue.
“Looking ahead, we are encouraged by the underlying health of the business and the long-term opportunities driven by increasing semiconductor content in automotive, industrial and AI data center applications,” El-Khoury added.
Analyst Reaction and Industry Context
Analysts at Mizuho Financial Group raised their price target on the stock to $120 from $70 following the results, citing “better June quarter guide, improving margins, and AI/DC trends.”
The results come as investors monitor signs of stabilization in ON Semiconductor’s key industrial and automotive markets. There is also strong focus on demand from AI data centers and the company’s position in silicon carbide technology, a fast-growing segment tied to electric vehicles, automation and high-performance power applications.
Why the Stock Fell
One possible explanation for the negative share reaction is the stock’s strong run-up ahead of earnings. ON Semiconductor shares have surged about 89% year-to-date, significantly outperforming the Philadelphia Semiconductor Index, which has gained nearly 49%, and the broader S&P 500, up around 5%.
The broader AI sector has also faced some pressure recently, after major tech companies including Alphabet Inc., Microsoft Corporation and Meta Platforms Inc. reaffirmed or increased capital spending plans on AI. This followed reports that OpenAI had fallen short of internal targets for revenue and user growth.