ON Semiconductor Corporation (ON.US) exceeded expectations in Q1 with data center revenue increasing by a staggering 30% compared to the previous quarter.

According to the financial app The Economic Observer, the semiconductor manufacturer ON Semiconductor Corporation (ON.US) announced its financial performance for the first quarter of 2026 after the market closed on Monday. The company's quarterly revenue increased by 5% year-on-year to $1.51 billion, higher than the market's expectation of $1.49 billion; adjusted earnings per share were $0.64, higher than the market consensus of $0.62. According to GAAP, the loss per share was $0.08, compared to a loss per share of $1.15 in the same period in 2025. As of the time of writing, the stock price fell by about 4.7% in after-hours trading, but has increased by 88% year-to-date. The company's revenue growth was mainly driven by the Power Solutions division, which saw a 14% year-on-year increase in revenue to $736.6 million. The Analog and Mixed Signal division decreased by 4.6%, while the Intelligent Sensing division saw a slight increase of 0.9%. For the first quarter ending on March 31, the company's adjusted gross margin was 38.5%, in line with expectations but lower than the 40% in the same period last year. ON Semiconductor expects revenue for the current quarter to be between $1.54 billion and $1.64 billion, higher than the market's expectation of $1.53 billion; adjusted earnings per share are anticipated to be between $0.65 and $0.77, with a midpoint of $0.71, higher than the expected $0.67. The company indicated that the adjusted gross margin may be between 38% and 40%, with the market expecting 38.8%. The company also repurchased $346 million worth of stock in the first quarter. The management stated, "Our demand remained strong in this quarter, our performance exceeded expectations, and we have moved beyond the cyclical bottom into a recovery trajectory." CEO Hassane El-Khoury stated, "Our AI data center business is accelerating, with a sequential growth rate of over 30%. Looking ahead, we are encouraged by the fundamental health of our business and the long-term opportunities presented by the increasing semiconductor content in automotive, industrial, and AI data center applications." CFO Thad Trent added, "Through operational improvements, we achieved strong operating leverage, with operating profit increasing by 10% year-on-year, double the revenue growth rate. Our strong product portfolio and optimized cost structure enable us to accelerate profit margins and earnings levels as the market environment continues to improve." ON Semiconductor was spun off from Motorola in 1999 and has grown through a series of acquisitions to become a global analog chip supplier focused on power management in automotive, industrial, and cloud data center applications. In terms of product demand and inventory levels, this quarter, ON Semiconductor's Days Inventory Outstanding (DIO) was 200 days, 33 days higher than its five-year average. DIO is an important metric for semiconductor manufacturers, reflecting the capital intensity of the business and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventory is usually kept stable, giving chipmakers pricing power. A continuous increase in DIO may serve as a warning signal of weak demand, and if inventory continues to rise, the company may have to cut production.