How Investors Are Reacting To ON Semiconductor (ON) Teaming Up With NVIDIA for AI Data Center Power

• ON Semiconductor recently announced a partnership with NVIDIA to develop advanced 800 Volt DC power architectures for next-generation AI data centers, aiming to boost efficiency, sustainability, and power density.
• While this collaboration highlights ON Semiconductor's role at the forefront of power solutions for AI infrastructure, analysts continue to anticipate significant declines in the company's earnings and revenues compared to the previous year.
• We'll explore how ON Semiconductor's pivotal role in AI data center power systems may influence its broader investment narrative moving forward.

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ON Semiconductor Investment Narrative Recap

To be a shareholder in ON Semiconductor, you need to believe that its position in critical power management for AI data centers and advanced automotive applications will ultimately outweigh near-term earnings pressures. While the NVIDIA partnership signals a step forward in AI infrastructure, analysts are still anticipating notable year-over-year declines in revenue and profitability, indicating this news is positive for future positioning, but not likely to shift immediate risks such as continued margin pressure due to underutilization and volume weakness. For now, the biggest short-term catalyst remains successful recovery and expansion in AI and automotive end-markets, while risks like inventory digestion and lower gross margins linger.

Among recent announcements, ON Semiconductor’s collaboration with ZEEKR to supply EliteSiC technology for electric vehicles stands out as especially relevant. This partnership closely relates to the company’s potential catalyst in the automotive sector, where gaining share and capturing new design wins could counterbalance revenue pressures and help drive much-needed growth.

However, despite these advancements, the tug-of-war with inventory digestion, especially in the automotive segment, remains a detail every investor should keep in mind as…

Read the full narrative on ON Semiconductor (it's free!)

ON Semiconductor's outlook projects $7.5 billion in revenue and $1.8 billion in earnings by 2028. This scenario requires 4.0% annual revenue growth and a $1.17 billion increase in earnings from the current $633.7 million.

Uncover how ON Semiconductor's forecasts yield a $57.53 fair value, in line with its current price.

Exploring Other Perspectives

Fourteen members of the Simply Wall St Community estimate fair values for ON Semiconductor ranging from US$50.45 to US$67.42 per share. While opinions are split, ongoing revenue and margin concerns continue to shape performance expectations and highlight the value of reviewing multiple viewpoints.

Explore 14 other fair value estimates on ON Semiconductor - why the stock might be worth 11% less than the current price!

Build Your Own ON Semiconductor Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your ON Semiconductor research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free ON Semiconductor research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate ON Semiconductor's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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