ON Semiconductor (ON) Could Be 22% Undervalued On Its Silicon Carbide Growth Story
ON Semiconductor (ON) is back in focus as investors look ahead to its August 3 quarterly report, with expectations for higher revenue and earnings for the June 2026 period.
See our latest analysis for ON Semiconductor.
ON Semiconductor's share price has climbed 57.04% year to date to $89.04, while the 1 year total shareholder return of 51.79% contrasts with a 3 year total shareholder return that is down 17.36%. This suggests strong recent momentum after a weaker stretch.
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ON Semiconductor has a solid position in power and sensing chips and the stock has raced ahead on that story. After this sharp run, the real issue is whether the current price still offers sensible value.
Most Popular Narrative: 22% Undervalued
ON Semiconductor's most followed narrative pegs fair value at $113.52, noticeably above the recent $89.04 close. This puts the current rally into a different light.
The company's strategic investments in silicon carbide (SiC), wide bandgap technologies, and advanced power management solutions for both automotive and AI data centers position it at the forefront of key structural growth markets; as these high-value products ramp, they are expected to enhance margins and drive long-term earnings growth.
Curious what has to happen in ON Semiconductor's income statement for that fair value to add up? Revenue mix, margin expansion and future earnings multiples all play a central role. The narrative sets out a specific path for each, and the numbers behind it may surprise you.
Result: Fair Value of $113.52 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, the upbeat ON Semiconductor narrative still depends on end markets holding up, with cyclical auto demand and manufacturing underutilization both capable of pressuring margins and cash flow.
Find out about the key risks to this ON Semiconductor narrative.
Another View: What ON Semiconductor's P/E Is Telling You
The first ON Semiconductor narrative leans on earnings forecasts and a fair value of $113.52, but the current P/E of 60.4x paints a tougher picture. It is higher than the US Semiconductor industry at 57.9x and also above a fair ratio of 54.2x that the market could move toward.
That mix, expensive versus industry yet cheaper than peers at 86.7x, suggests investors are paying up for growth while still facing valuation risk if expectations cool or the market leans closer to that lower fair ratio. The real question is whether you are comfortable with that trade off.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Feeling torn between ON Semiconductor's recent momentum and its valuation signals? Take a closer look at both sides of the story, then move quickly to form your own view with the 1 key reward and 2 important warning signs.
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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.
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