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Is ON a good stock to buy? We came across a bullish thesis on ON Semiconductor Corporation on Valueinvestorsclub.com by Value1929. In this article, we will summarize the bulls’ thesis on ON. ON Semiconductor Corporation’s share was trading at $93.30 as of April 28th. ON’s trailing and forward P/E were 338.07 and 33.78 respectively according to Yahoo Finance.
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ON Semiconductor Corporation provides intelligent sensing and power solutions in Hong Kong, Singapore, the United Kingdom, the United States, and internationally. ON is positioned as a leveraged play on the accelerating power demands of AI data centers, offering a differentiated angle on the next-generation architecture shift tied to NVIDIA’s Rubin platform expected in the second half of 2026.
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While the market continues to view ON through the lens of cyclical weakness in automotive and industrial end markets, this perspective underappreciates a structural inflection driven by rising power density in AI systems.
As server power requirements scale from historical levels of ~3kW to 12–20kW+, traditional bottom-cooled designs are becoming thermally unviable, creating a bottleneck that ON’s proprietary T2PAK top-side cooled packaging directly addresses. This technology enables efficient heat dissipation while maintaining compatibility with high-volume manufacturing through optical inspection advantages, positioning it as a preferred solution for hyperscalers and next-generation AI infrastructure.
The company has already begun shipping these products to leading customers, with its AI thermal segment growing approximately 100% year-over-year and expected to sustain that trajectory into 2026, while delivering materially higher margins of 55–60% compared to its legacy 25–35% profile. As ON strategically exits low-margin businesses and reallocates capacity toward AI-driven demand, utilization rates are expected to recover from current trough levels, unlocking significant operating leverage.
Management indicates that normalization toward ~80% utilization could drive up to 900 basis points of gross margin expansion, supporting a path back to long-term targets above 50%. This combination of mix shift, utilization recovery, and structural demand tailwinds creates a compelling setup for both earnings expansion and valuation re-rating.
Previously, we covered a bullish thesis on ON Semiconductor Corporation (ON) by Charly AI in January 2025, which highlighted the company’s positioning across automotive, industrial, and energy markets, alongside cyclical headwinds and long-term recovery potential. ON’s stock price has appreciated by 67.77% since our coverage. Value1929 shares a similar view but emphasizes on AI-driven power demand and margin expansion from advanced thermal packaging.