ON Semiconductor Positioned to Benefit from AI Spending Surge
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: Fool
- Inference Spending Surpass Infrastructure: In the coming years, inference spending is expected to surpass data center infrastructure spending, positioning ON Semiconductor to benefit significantly in the AI sector, particularly against the backdrop of rapid growth in the electric vehicle and industrial markets.
- Data Center Revenue Growth: ON Semiconductor's data center revenue grew by 30% in Q1, projected to reach $250 million by 2025, making this growth a key driver for the company's multi-year expansion, pushing overall sales to $6 billion.
- Future Growth Expectations: CEO Hassane El-Khoury anticipates that the company's data center revenue will double in 2026, implying about $500 million, which may exceed market expectations of $6.47 billion in total revenue, indicating strong market potential.
- Market Demand Potential: As inference spending increases demand for power semiconductors, ON Semiconductor's capability to meet the needs of the new generation of data centers and edge inference will position it favorably in future market competition.
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Analyst Views on ON
Wall Street analysts forecast ON stock price to fall
19 Analyst Rating
9 Buy
10 Hold
0 Sell
Moderate Buy
Current: 112.920
Low
50.00
Averages
61.25
High
80.00
Current: 112.920
Low
50.00
Averages
61.25
High
80.00
About ON
ON Semiconductor Corporation is engaged in providing intelligent power and intelligent sensing solutions. The Company’s intelligent power technologies enable the electrification of drivetrain in the automotive industry to allow for lighter and longer-range electric vehicles. Its segments include Power Solutions Group (PSG), the Analog and Mixed-Signal Group (AMG) and the Intelligent Sensing Group (ISG). PSG segment provides a portfolio of discrete, module, and integrated semiconductor devices designed to enable conversion across artificial intelligence (AI) data centers, energy infrastructure, automotive and industrial. AMG segment designs and develops a range of analog and mixed-signal solutions including power‑management, sensor‑interface, connectivity, and products that serve automotive, industrial automation, AI data center, computing, and mobile end markets.
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.
ON Semiconductor Set to Benefit from AI Inference Spending Surge
- Surge in AI Inference Spending: AI inference spending is projected to surpass data center infrastructure spending in the coming years, positioning ON Semiconductor as a major beneficiary due to its strong foothold in the power semiconductor sector.
- Data Center Revenue Boom: ON Semiconductor's data center revenue is expected to reach $250 million in 2025, reflecting a 30% increase from 2024, which will provide robust momentum for the company's long-term expansion, particularly in collaboration with Nvidia.
- Future Growth Expectations: CEO Hassane El-Khoury anticipates that data center revenue will double to $500 million in 2026, significantly enhancing the company's position within the overall $6.47 billion revenue forecast, indicating that the market may be underestimating its potential.
- Diversified Market Opportunities: Beyond electric vehicles and industrial markets, ON Semiconductor is expanding into edge inference applications in smart manufacturing and healthcare diagnostics, further strengthening its competitive edge in the rapidly evolving AI landscape.
See More
ON Semiconductor Positioned to Benefit from AI Spending Surge
- Inference Spending Surpass Infrastructure: In the coming years, inference spending is expected to surpass data center infrastructure spending, positioning ON Semiconductor to benefit significantly in the AI sector, particularly against the backdrop of rapid growth in the electric vehicle and industrial markets.
- Data Center Revenue Growth: ON Semiconductor's data center revenue grew by 30% in Q1, projected to reach $250 million by 2025, making this growth a key driver for the company's multi-year expansion, pushing overall sales to $6 billion.
- Future Growth Expectations: CEO Hassane El-Khoury anticipates that the company's data center revenue will double in 2026, implying about $500 million, which may exceed market expectations of $6.47 billion in total revenue, indicating strong market potential.
- Market Demand Potential: As inference spending increases demand for power semiconductors, ON Semiconductor's capability to meet the needs of the new generation of data centers and edge inference will position it favorably in future market competition.
See More
Electric Vehicles as Keystone Species in Tech Stack
- Tesla's Strong Earnings: Tesla reported Q1 FY2026 revenue of $22.39 billion, a 15.78% year-over-year increase, with automotive gross margin rising from 16.2% to 21.1%, indicating robust market demand and profitability.
- EV Market Growth: The volume of electric vehicles has driven down battery costs, creating a positive feedback loop that has scaled wide-bandgap semiconductor technology for grid applications, further advancing technological progress in the sector.
- Surge in Silicon Carbide Demand: On Semiconductor and Wolfspeed saw stock price increases of 124.6% and 229.75%, respectively, reflecting strong demand for silicon carbide in electric vehicles and AI data centers, showcasing rapid industry growth potential.
- Investor Focus on Power Electronics: Power electronics is viewed as the
See More
Citi Raises Price Targets for Texas Instruments and ON Semiconductor
- Price Target Increase: Citi raised Texas Instruments' (TXN) price target from $280 to $345 while reiterating it as a top pick, anticipating significant share gains in the data center power market starting in 2H26, which is expected to enhance the company's performance.
- Optimistic Outlook for ON: Citi raised ON Semiconductor's (ON) price target from $100 to $120, maintaining a Neutral rating, but analysts are optimistic about its Silicon Carbide (SiC) business recovery amid the 800V DC transition, expecting renewed momentum to be showcased at the Analyst Day on September 16.
- Market Growth Potential: Analysts project the power delivery market (800V-to-1V conversion) to grow from approximately $2 billion in 2026 to around $12 billion by 2028, with a compound annual growth rate exceeding 70%, driven by rising power requirements for next-gen GPU and ASIC chips.
- Connector Market Opportunities: As the 800V DC transition progresses, analysts believe companies like Amphenol (APH) and TE Connectivity (TEL) will benefit from increased demand for power distribution and thermal management units, further solidifying their market positions.
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Analysis of S&P 500 Index Fund Investments
- Investment Recommendation: Most financial advisors recommend low-fee S&P 500 index funds like the Vanguard S&P 500 ETF (VOO) and SPDR S&P 500 ETF (SPY) for their convenience, although they are not perfect, they remain a top choice for many investors.
- Concentration Risk: The top 10 components of the S&P 500 account for 39% of its total market value, with weights of 7.43% for Nvidia, 6.59% for Alphabet, and 6.48% for Apple, indicating a high concentration of investor funds in a few companies, which increases market volatility risk.
- Alternative Investment Options: The Invesco S&P 500 Equal Weight ETF (RSP) offers a more balanced investment approach compared to standard market-cap-weighted funds, with a 15-year average annual return of 12%, lower than Vanguard's 14.4%, but may hold its value better during market downturns.
- Long-Term Return Potential: While the Vanguard S&P 500 ETF has higher long-term returns, the Motley Fool analyst team suggests that there are currently 10 other stocks that could provide higher returns, prompting investors to consider these potential high-yield opportunities when making investment decisions.
See More
Analysis of S&P 500 ETF Investments
- Concentration Risk: Standard S&P 500 ETFs like Vanguard and SPDR have their top 10 components accounting for 39% of total market value, despite representing only 2% of the index, indicating a high concentration of funds in a few companies, which may pose greater risks during market volatility.
- Alternative Investment Options: The Invesco S&P 500 Equal Weight ETF offers a balanced investment approach, with quarterly rebalancing that equalizes stock weights; although it has averaged annual gains of 12%, lower than Vanguard's 14.4%, it may provide better resilience during market downturns.
- Market Performance Comparison: The Vanguard S&P 500 ETF is currently priced at $681.95, with a 52-week range of $545.75 to $699.15, while the Invesco ETF is priced at $211.65, highlighting performance differences that investors should consider based on their risk tolerance.
- Long-term Investment Strategy: While S&P 500 ETFs have shown strong performance in recent years, investors should be mindful of concentration risks, especially during market corrections, and consider balanced ETFs as part of a long-term investment strategy for more stable returns.
See More
ON Semiconductor Set to Benefit from AI Inference Spending Surge
- Surge in AI Inference Spending: AI inference spending is projected to surpass data center infrastructure spending in the coming years, positioning ON Semiconductor as a major beneficiary due to its strong foothold in the power semiconductor sector.
- Data Center Revenue Boom: ON Semiconductor's data center revenue is expected to reach $250 million in 2025, reflecting a 30% increase from 2024, which will provide robust momentum for the company's long-term expansion, particularly in collaboration with Nvidia.
- Future Growth Expectations: CEO Hassane El-Khoury anticipates that data center revenue will double to $500 million in 2026, significantly enhancing the company's position within the overall $6.47 billion revenue forecast, indicating that the market may be underestimating its potential.
- Diversified Market Opportunities: Beyond electric vehicles and industrial markets, ON Semiconductor is expanding into edge inference applications in smart manufacturing and healthcare diagnostics, further strengthening its competitive edge in the rapidly evolving AI landscape.
See More
ON Semiconductor Positioned to Benefit from AI Spending Surge
- Inference Spending Surpass Infrastructure: In the coming years, inference spending is expected to surpass data center infrastructure spending, positioning ON Semiconductor to benefit significantly in the AI sector, particularly against the backdrop of rapid growth in the electric vehicle and industrial markets.
- Data Center Revenue Growth: ON Semiconductor's data center revenue grew by 30% in Q1, projected to reach $250 million by 2025, making this growth a key driver for the company's multi-year expansion, pushing overall sales to $6 billion.
- Future Growth Expectations: CEO Hassane El-Khoury anticipates that the company's data center revenue will double in 2026, implying about $500 million, which may exceed market expectations of $6.47 billion in total revenue, indicating strong market potential.
- Market Demand Potential: As inference spending increases demand for power semiconductors, ON Semiconductor's capability to meet the needs of the new generation of data centers and edge inference will position it favorably in future market competition.
See More
Electric Vehicles as Keystone Species in Tech Stack
- Tesla's Strong Earnings: Tesla reported Q1 FY2026 revenue of $22.39 billion, a 15.78% year-over-year increase, with automotive gross margin rising from 16.2% to 21.1%, indicating robust market demand and profitability.
- EV Market Growth: The volume of electric vehicles has driven down battery costs, creating a positive feedback loop that has scaled wide-bandgap semiconductor technology for grid applications, further advancing technological progress in the sector.
- Surge in Silicon Carbide Demand: On Semiconductor and Wolfspeed saw stock price increases of 124.6% and 229.75%, respectively, reflecting strong demand for silicon carbide in electric vehicles and AI data centers, showcasing rapid industry growth potential.
- Investor Focus on Power Electronics: Power electronics is viewed as the
See More
Citi Raises Price Targets for Texas Instruments and ON Semiconductor
- Price Target Increase: Citi raised Texas Instruments' (TXN) price target from $280 to $345 while reiterating it as a top pick, anticipating significant share gains in the data center power market starting in 2H26, which is expected to enhance the company's performance.
- Optimistic Outlook for ON: Citi raised ON Semiconductor's (ON) price target from $100 to $120, maintaining a Neutral rating, but analysts are optimistic about its Silicon Carbide (SiC) business recovery amid the 800V DC transition, expecting renewed momentum to be showcased at the Analyst Day on September 16.
- Market Growth Potential: Analysts project the power delivery market (800V-to-1V conversion) to grow from approximately $2 billion in 2026 to around $12 billion by 2028, with a compound annual growth rate exceeding 70%, driven by rising power requirements for next-gen GPU and ASIC chips.
- Connector Market Opportunities: As the 800V DC transition progresses, analysts believe companies like Amphenol (APH) and TE Connectivity (TEL) will benefit from increased demand for power distribution and thermal management units, further solidifying their market positions.
See More
Analysis of S&P 500 Index Fund Investments
- Investment Recommendation: Most financial advisors recommend low-fee S&P 500 index funds like the Vanguard S&P 500 ETF (VOO) and SPDR S&P 500 ETF (SPY) for their convenience, although they are not perfect, they remain a top choice for many investors.
- Concentration Risk: The top 10 components of the S&P 500 account for 39% of its total market value, with weights of 7.43% for Nvidia, 6.59% for Alphabet, and 6.48% for Apple, indicating a high concentration of investor funds in a few companies, which increases market volatility risk.
- Alternative Investment Options: The Invesco S&P 500 Equal Weight ETF (RSP) offers a more balanced investment approach compared to standard market-cap-weighted funds, with a 15-year average annual return of 12%, lower than Vanguard's 14.4%, but may hold its value better during market downturns.
- Long-Term Return Potential: While the Vanguard S&P 500 ETF has higher long-term returns, the Motley Fool analyst team suggests that there are currently 10 other stocks that could provide higher returns, prompting investors to consider these potential high-yield opportunities when making investment decisions.
See More
Analysis of S&P 500 ETF Investments
- Concentration Risk: Standard S&P 500 ETFs like Vanguard and SPDR have their top 10 components accounting for 39% of total market value, despite representing only 2% of the index, indicating a high concentration of funds in a few companies, which may pose greater risks during market volatility.
- Alternative Investment Options: The Invesco S&P 500 Equal Weight ETF offers a balanced investment approach, with quarterly rebalancing that equalizes stock weights; although it has averaged annual gains of 12%, lower than Vanguard's 14.4%, it may provide better resilience during market downturns.
- Market Performance Comparison: The Vanguard S&P 500 ETF is currently priced at $681.95, with a 52-week range of $545.75 to $699.15, while the Invesco ETF is priced at $211.65, highlighting performance differences that investors should consider based on their risk tolerance.
- Long-term Investment Strategy: While S&P 500 ETFs have shown strong performance in recent years, investors should be mindful of concentration risks, especially during market corrections, and consider balanced ETFs as part of a long-term investment strategy for more stable returns.
See More
