📉 ON Semiconductor: strong numbers, but shares are falling!
ON Semiconductor $ON is an American technology company specializing in the development and manufacture of semiconductor components used in automotive, industrial automation and artificial intelligence technologies. The company delivered results exactly as expected. Earnings per share of $0.53 exactly met analyst estimates. Revenue came in at $1.47 billion, easily beating expectations by $20 million.
Yet the stock fell by more than 15%!

🔍 Important numbers
Revenue increased quarter-over-quarter by 1,6 %The company is managing to maintain its growth trajectory even in an uncertain market environment.

Gross margin (non-GAAP) is 37,6 %, a solid result for a semiconductor company.

Free cash flow of EUR 106 million was generated. USD 106 billion represents 19 % of sales.

Capital expenditures were reasonable at EUR 78 million. USD 78, i.e. only 5 % of sales.

Management remains strategically focused on growth in the data center segments (especially AI) and automotive.

❗Market reaction
In my opinion, the price drop is not so much related to results as it is to the future outlook. The company has not delivered any pleasant surprises in terms of future earnings.

After all, the market today doesn't just want semiconductor companies to meet expectations, but to exceed them and raise targets for the coming years.

Another factor may be the lack of outlook: the company expects Q3 revenues in the range of USD1. 465-1 .565 billion and earnings per share of USD 0.54-0.64. This is realistic, but not ambitious. Moreover, it was announced that the company will discontinue some product lines in 2026, which will lead to 5% decline in sales.

💬Leadership
CEO Hassan Al Khoury stressed that the company is "transforming into a more focused and differentiated company". CFO Tad Tran pointed to a key goal : "expanding margins through greater operational efficiency and capacity utilization."

⚠️ Risks
Planned discontinuation of product lines in 2026 and associated revenue decline.

Competitive pressure in the semiconductor segment (Nvidia, AMD, Broadcom...).

Uncertain macro: geopolitics, tariffs, possible slowdown in demand.

Dependence on the automotive market, which can be cyclical.

What is your opinion on this company?