onsemi’s fourth quarter was marked by an 11.2% year-over-year revenue decline, reflecting ongoing market headwinds and a cautious market reaction. Management pointed to continued softness in traditional segments but highlighted stabilization in automotive and the first signs of recovery in industrial. CEO Hassane El-Khoury noted, “Automotive inventory digestion is largely behind us, AI data center is increasingly becoming a meaningful growth engine for the company, and we believe we have seen the bottom for industrial.” Investments in advanced technologies, particularly in the AI data center and automotive content, were key areas of focus during the quarter.
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onsemi (ON) Q4 CY2025 Highlights:
- Revenue: $1.53 billion vs analyst estimates of $1.54 billion (11.2% year-on-year decline, in line)
- Adjusted EPS: $0.64 vs analyst estimates of $0.62 (2.5% beat)
- Adjusted EBITDA: $517.8 million vs analyst estimates of $431.6 million (33.8% margin, 20% beat)
- Revenue Guidance for Q1 CY2026 is $1.49 billion at the midpoint, below analyst estimates of $1.51 billion
- Adjusted EPS guidance for Q1 CY2026 is $0.47 at the midpoint, below analyst estimates of $0.61
- Operating Margin: 13.1%, down from 23.7% in the same quarter last year
- Inventory Days Outstanding: 191, down from 193 in the previous quarter
- Market Capitalization: $28.45 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From onsemi’s Q4 Earnings Call
- Ross Seymore (Deutsche Bank) asked about the weak 'Other' revenue category and the seasonal outlook. CFO Thad Trent clarified that, excluding product exits, results were above seasonal, and AI data center showed strength despite overall softness.
- Vivek Arya (Bank of America Securities) questioned the sustainability of product exits and long-term growth targets. CEO Hassane El-Khoury explained that exits would peak mid-year, with core business expected to outpace the market post-2027.
- Blayne Curtis (Jefferies) pressed for specifics on AI data center growth in 2026. El-Khoury reiterated confidence in strong baseline growth but declined to provide segment-level guidance.
- Joe Quatrochi (Wells Fargo) inquired about free cash flow targets and capital returns. Trent reaffirmed a 25–30% target for free cash flow margin and the plan to return 100% of free cash flow to shareholders via repurchases.
- Christopher Rolland (Susquehanna) asked about the role of silicon carbide in automotive and AI. El-Khoury noted strong share in China and design wins in North America, while confirming no near-term move to larger wafer sizes for internal manufacturing.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will be monitoring (1) the pace of AI data center revenue growth and new design wins, (2) the impact of ongoing product exits on both reported revenue and margin mix, and (3) improvements in fab utilization and resulting margin expansion from the FabRite initiatives. Execution in automotive content growth and successful rollout of new GaN-based products will also serve as additional indicators of performance.
onsemi currently trades at $72.63, up from $65.10 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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