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How Weaker Results And All-Free-Cash-Flow Buybacks At ON (ON) Have Changed Its Investment Story

Simply Wall St·02/19/2026 15:35:16
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  • In February 2026, ON Semiconductor reported fourth-quarter 2025 sales of US$1,530.1 million and net income of US$181.8 million, while full-year 2025 sales reached US$5,995.4 million with net income of US$121 million, alongside first-quarter 2026 guidance for revenue of US$1,435 million to US$1,535 million and diluted EPS of US$0.28 to US$0.38.
  • At the same time, the company underscored growing AI data center demand, stabilization in automotive and industrial markets, and a commitment to return all free cash flow to shareholders through extensive share repurchases, having already bought back over 10% of its shares under programs launched since 2023.
  • Next, we examine how weaker earnings, cautious guidance, and the pledge to return all free cash flow via buybacks affect ON’s investment story.

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ON Semiconductor Investment Narrative Recap

To own ON Semiconductor, you need to believe its focused bets on EVs, industrial, and AI data centers can offset near term pressure from weaker earnings and portfolio exits. The latest results and cautious Q1 2026 guidance reinforce that the main short term catalyst remains any clear demand inflection in autos and industrial, while the biggest risk is that underutilized manufacturing capacity and auto softness linger longer than expected. So far, this update does not materially change that balance.

The most relevant announcement here is ON’s plan to return 100% of free cash flow to shareholders via buybacks, with over 10% of shares already repurchased since 2023. That matters because it ties capital returns directly to cash generation at a time when reported earnings are under pressure, magnifying both the potential upside if margins recover and the risk if portfolio rationalization and end market headwinds keep cash flow subdued.

Yet behind the promise of AI and EV growth, investors should be aware that ON’s heavy reliance on automotive and still low fab utilization could...

Read the full narrative on ON Semiconductor (it's free!)

ON Semiconductor's narrative projects $7.5 billion revenue and $1.9 billion earnings by 2028. This requires 5.4% yearly revenue growth and about a $1.4 billion earnings increase from $465.8 million today.

Uncover how ON Semiconductor's forecasts yield a $63.00 fair value, a 11% downside to its current price.

Exploring Other Perspectives

ON 1-Year Stock Price Chart
ON 1-Year Stock Price Chart

Before this earnings miss, the most optimistic analysts were penciling in about US$7.9 billion of revenue and US$2.6 billion of earnings by 2028, which is far more upbeat than consensus and leans heavily on rapid margin expansion and success in areas like silicon carbide and Treo, so you should weigh how this new set of numbers might shift that rosier view.

Explore 11 other fair value estimates on ON Semiconductor - why the stock might be worth as much as 5% more than the current price!

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.