ON Semiconductor (ON) Stock Plunges 15% Despite Meeting Q2 Estimates
ON Semiconductor (NASDAQ: ON) stock plunged 15.58%, closing at $47.97, after reporting Q2 2025 results that met expectations but failed to reassure investors amid ongoing weakness in automotive demand and cautious guidance.
📊 Q2 2025 Financial Results (Quarter Ended July 4, 2025)
| Metric | Result | YoY Change | Commentary |
|---|---|---|---|
| Revenue | $1.47 billion | ↓ ~15% | Slightly above midpoint of guidance |
| Non-GAAP EPS | $0.53 | ↓ ~45% | In line with analyst expectations |
| Non-GAAP Gross Margin | 37.6% | ↓ from 45.2% | Margins compressed due to pricing pressure |
| Operating Margin | 17.3% | ↓ YoY | Efficiency impacted by weaker volumes |
🧭 Segment & Geographic Insights
- Automotive: $733 million, down sequentially. Weakness in North America and Europe.
- Industrial: Grew ~2% QoQ.
- Silicon Carbide (SiC): Strong growth in China, offsetting some auto softness.
- Smart Power for AI/Data Centers: Nearly doubled YoY demand.
🗣️ Management Commentary
CEO Hassane El-Khoury said customer behavior remains cautious, particularly in automotive and industrial end-markets. He noted that while SiC adoption in China showed strength, broad-based demand softness continues to weigh on results.
Q3 guidance:
- Revenue: $1.465–$1.565 billion
- EPS: $0.54–$0.64
Both metrics were slightly ahead of consensus at the midpoint but failed to excite investors.
📉 Stock & Analyst Reaction
- Stock Reaction: ON was the worst-performing S&P 500 stock on August 4, dropping 15.58%.
- Valuation: Shares now trade at ~39x trailing earnings.
- Analyst Views: JPMorgan raised its price target from $48 to $56 but kept a Neutral rating. Most analysts remain cautious amid macro headwinds and sector weakness.
🔎 Key Takeaways
- Q2 results met expectations but highlighted shrinking margins and continued macro pressure.
- Investors reacted sharply to the muted outlook, driving the stock to its lowest level since mid-2022.
- ON faces structural challenges from EV demand uncertainty, pricing headwinds, and inventory digestion in auto/industrial sectors.