ON with a miss, down 10% and on our Watch List.
Boaty and I just looked it over and it's time for a Top Trade Alert:
🚢 ON Semiconductor (ON) just reported Q2 earnings with “mixed but encouraging” results, and I agree—it’s looking like a buy opportunity here.
- Results in Brief: ON posted $1.47 billion in revenue, slightly exceeding estimates by 1.3%, though still down 15% year-over-year as the entire semiconductor sector works through a cyclical slowdown. EPS came in at $0.53, just a penny shy of consensus.
- Segment Strength: The Power Solutions Group (which includes high-growth areas for EVs and industrials) jumped 8% sequentially, while the other divisions (Analog, Intelligent Sensing) had moderate declines. Margins compressed but remained within management’s guidance, indicating no big negative “surprises.”
- Financial Health: ON maintained $2.8 billion in cash with relatively low net debt, and operating cash flow remains solid.
- Outlook and Guidance: Management guided Q3 revenue to $1.47–$1.57 billion and EPS to $0.54–$0.64, signaling stabilization and gradual improvement. This matches or beats the Street’s expectations.
- Strategic Position: Yes, the chip cycle is still rocky, but ON’s focus on auto/EVs, power/energy, and AI-enabled sensing makes it a secular winner as those themes ramp back up over the next year or two.
Bottom line:
The muted market reaction (mild dip on the report) reflects near-term macro caution, but ON’s steady execution, financial strength, and positioning for long-term megatrends (EVs, AI, electrification) make it a strong “buy on dip” candidate. If you believe in the future of advanced drivers, grid electrification, or connected devices, now is a logical time to build a position ahead of wider recovery in chip demand.
😎 I do believe in that stuff but the President does not. Where does that leave ON into Jan 2027 (our investing horizon at the moment)?
🚢 You’re right to be thinking about policy risk—especially with the President openly hostile to green tech, EVs, and electrification themes.
