ONON Shares Surge After Record Sales Drive Profitability
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 12 2026
0mins
Source: Fool
- Significant Sales Growth: On Holding (ONON) shares surged over 5% pre-market, driven by a remarkable 44.4% revenue growth in the APAC region, achieving record net sales and profitability, which enhances its full-year profit outlook and validates its premium brand strategy.
- Profitability Enhancement: Co-CEO Casper Coppetti emphasized that Q1 performance serves as strong evidence of their premium strategy's success, with projections indicating a gross profit margin of 64.5% by year-end, further solidifying the company's market position.
- Positive Market Reaction: Despite facing significant headwinds from spending and tariffs, TMF CIO Andy Cross noted that On Holding continues to demonstrate strong long-term performance, reflecting investor confidence in its business model and optimistic outlook for future growth.
- Favorable Industry Trends: As AI workloads shift towards inference, the CPU market is entering a growth 'super cycle,' presenting new opportunities for chipmakers like AMD and Intel, which are expected to be near-term winners, further driving stock price increases.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 426.990
Low
500.00
Averages
631.36
High
678.00
Current: 426.990
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company. The Company develops and supports software, services, devices, and solutions. The Company’s segments include Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services. This segment primarily comprises: Office Commercial, Office Consumer, LinkedIn, and Dynamics business solutions. The Intelligent Cloud segment consists of server products and cloud services, including Azure and other cloud services, SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs), and Nuance and GitHub; and Enterprise Services, including enterprise support services, industry solutions and Nuance professional services. The More Personal Computing segment primarily comprises Windows, Devices, Gaming, and search and news advertising.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Launch of E7 Platform: On May 1, Microsoft launched Microsoft 365 E7 at $99 per user per month, expected to boost revenue by 2.4% to 2.5%, integrating various products and enhancing enterprise management of AI agents, which could lead to significant revenue increases.
- Analyst Optimism: With 95% of analysts rating Microsoft as a buy and a median 12-month price target of $550, approximately 30% above its current price, there is strong market confidence in Microsoft's growth potential moving forward.
See More
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- Capex and Free Cash Flow: Alphabet's projected capital expenditures for this year are between $180 billion and $190 billion, which will reduce free cash flow from over $73 billion last year to about $26 billion this year; however, Abel's investment decision reflects recognition of Alphabet's long-term growth potential.
- Market Share and Competitive Advantage: Alphabet holds an 85% to 90% market share in the traditional internet search market, and its large language model, Gemini, is believed to help protect its market position, suggesting that Abel's investment may further solidify Berkshire's competitive edge in this area.
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See More
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- Increased Stake in Alphabet: In the first quarter, Berkshire increased its stake in Alphabet to 6.7%, making it the fifth-largest holding in the portfolio, indicating Abel's confidence in the artificial intelligence sector, which contrasts with Buffett's traditional investment style.
- Market Share Advantage: Alphabet commands an 85% to 90% share of the traditional internet search market, and Abel's investment strategy may aim to leverage this strong market position and future growth potential, particularly driven by advancements in AI technology.
- Contrasting Investor Sentiments: While Abel was accumulating shares of Alphabet, other prominent hedge fund managers like Bill Ackman and Stanley Druckenmiller opted to reduce their stakes, reflecting differing views on Alphabet's future, and Abel's decisions may prove to be prescient in the long run.
See More
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- Threat of AI Technology: The rise of agentic AI poses a risk of obsolescence for traditional SaaS companies, particularly those reliant on outdated technologies, as increased efficiency could lead to reduced customer demand, impacting revenue stability.
- Platform Advantages: ServiceNow's Control Tower and Palantir's AI platform provide clients with unified AI management solutions, enhancing customer dependency on their platforms; despite a challenging market environment, both companies demonstrate strong growth potential.
- Valuation Pressure: Although ServiceNow and Palantir are high-growth and profitable companies, their price-to-earnings ratios of 61 and 154, respectively, limit investor buying interest, indicating that investment risks remain under current market conditions.
See More
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- Product Innovation Capability: Apple typically adopts a cautious approach when launching new technologies, innovating on existing models to attract users, as evidenced by the success of the iPhone and AirPods, suggesting it could similarly lead in the AI space.
- User Base Advantage: With over 2 billion devices in circulation, Apple can rapidly deploy new AI features, enhancing user retention and leveraging data to boost network effects, thereby strengthening its market competitiveness.
- Long-term Investment Value: Despite facing tariffs and regulatory scrutiny, Apple's strong customer loyalty and expanding high-margin services segment position it as a solid long-term investment, especially as AI technology matures, with future profit potential looking promising.
See More
The Reality of AI Threatening SaaS Companies
- SaaS Stock Decline: ServiceNow and Palantir Technologies have seen their stock prices drop by 33% and 23%, respectively, reflecting market concerns about the viability of traditional SaaS models in an AI-driven landscape, leading to diminished investor confidence and impacting company valuations.
- Rise of Agentic AI: Agentic AI renders many functions of SaaS software redundant, allowing clients to automate data analysis and marketing campaigns, thereby reducing demand for traditional SaaS subscriptions and affecting long-term revenue models.
- Transformation Challenges: Although ServiceNow and Palantir have made strides in AI, their legacy business models face challenges, particularly as older technology SaaS companies may lose market share during the transition, impacting their competitive edge.
- Valuation Risks: Despite demonstrating strong growth potential, ServiceNow and Palantir trade at trailing P/E ratios of 61 and 154, respectively, indicating that even at lower price points, investors should carefully assess their future investment return potential.
See More
