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Stock Markets August 3, 2026 04:14 PM

Onsemi Tops Q2 Estimates, Sets Q3 Revenue Guidance Above Street

Stronger-than-expected results driven by margin expansion and solid demand for power and AI-related solutions

By Jordan Park
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Onsemi reported second-quarter adjusted earnings per share of $0.74 and revenue of $1.60 billion, both slightly ahead of analyst expectations. The company raised guidance for the third quarter with a revenue midpoint above consensus and projected adjusted EPS above estimates. Gross and operating margins expanded year-over-year, free cash flow surged, and segment results were mixed across Power Solutions, Advanced Solutions and Intelligent Sensing.

Onsemi Tops Q2 Estimates, Sets Q3 Revenue Guidance Above Street
ON
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Key Points

  • Onsemi posted adjusted EPS of $0.74 versus consensus $0.71 and revenue of $1.60 billion versus consensus $1.59 billion, a 9% year-over-year increase from $1.47 billion.
  • Q3 revenue guidance of $1.65 billion to $1.75 billion has a midpoint of $1.70 billion, above the analyst consensus of $1.67 billion; adjusted EPS guidance midpoint of $0.87 is above the $0.84 consensus.
  • Adjusted gross margin expanded to 39.3% and adjusted operating margin rose to 20.8%; free cash flow quadrupled to $425.4 million and free cash flow margin increased from approximately 7% to 27%.
  • Segment results were mixed: Power Solutions revenue rose 19% to $829.0 million, Advanced Solutions revenue declined 2% to $545.7 million, and Intelligent Sensing revenue increased 7% to $228.8 million.

Overview

Onsemi (NASDAQ:ON) released second-quarter financial results that surpassed analyst projections. The company posted adjusted earnings per share of $0.74, beating the consensus estimate of $0.71 by $0.03. Quarterly revenue reached $1.60 billion, narrowly outpacing the $1.59 billion analysts expected and representing a 9% increase from $1.47 billion in the second quarter of 2025.

Outlook

For the third quarter of 2026, Onsemi provided revenue guidance in a range of $1.65 billion to $1.75 billion. The midpoint of that range, $1.70 billion, sits above the analyst consensus of $1.67 billion. The company also forecast adjusted EPS between $0.81 and $0.93, with a midpoint of $0.87 compared with a consensus estimate of $0.84.

Market reaction and commentary

Shares of Onsemi climbed 4.5% after the results and guidance were disclosed. Management said the results reflected demand momentum and broader customer uptake of specific product lines. The company noted particular strength across AI-driven applications and adoption of differentiated offerings such as Treo and its high-voltage power products.

Profitability and cash flow

Adjusted gross margin widened to 39.3% in the second quarter, up from 37.6% in the year-ago period. Adjusted operating margin increased to 20.8% from 17.3% year-over-year. Free cash flow rose sharply, quadrupling year-over-year to $425.4 million, and the free cash flow margin expanded from approximately 7% to 27%.

Segment performance

Results by business unit were mixed. The Power Solutions Group generated $829.0 million in revenue, up 19% year-over-year. The Advanced Solutions Group recorded $545.7 million in revenue, down 2% year-over-year. The Intelligent Sensing Group reported revenue of $228.8 million, an increase of 7% year-over-year.

Implications

The quarter combined revenue growth, margin expansion and a large increase in free cash flow, while business unit trends varied. Management highlighted demand tied to AI applications and growing customer adoption of targeted product portfolios as contributors to the beat and the outlook.

Risks

  • Advanced Solutions Group revenue declined 2% year-over-year, indicating potential headwinds within that business segment - this may affect semiconductors and related markets.
  • Guidance for the third quarter is provided as a range, introducing execution and demand risk if actual results land at the lower end of the forecast - this impacts investor expectations in the semiconductor sector.
  • Performance varied across business segments, creating uncertainty about whether demand strength in areas such as AI-driven applications will offset softness elsewhere in Advanced Solutions - relevant to power, sensing and AI hardware markets.

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