The Investor
05 May 2026, 09:39
onsemi Drops 4% in Pre-Market as Recovery Remains a Work in Progress
May 5, 2026
onsemi (Nasdaq: ON) is trading about 4% lower in Tuesday's pre-market session after the semiconductor maker reported its first quarter 2026 results following Monday's close. While the company beat its own guidance and painted an encouraging picture of recovery, a GAAP net loss and sequential revenue decline appear to be weighing on investor sentiment.
Q1 by the Numbers
Revenue came in at $1.513 billion, exceeding the midpoint of the company's guidance and up 5% compared to the first quarter of 2025. However, revenue slipped 1% sequentially from Q4 2025's $1.530 billion, a detail that may be giving markets pause.
Gross margin improved meaningfully year-over-year, reaching 38.5% on both a GAAP and non-GAAP basis, compared to just 20.3% on a GAAP basis in Q1 2025 — a sign that the operational restructuring underway at onsemi is having a real effect on the cost structure. Non-GAAP operating margin came in at 19.1%, up from 18.3% a year ago.
On a GAAP basis, however, the company reported a net loss of $33.4 million, or a loss of $0.08 per diluted share, compared to a loss of $486.1 million in Q1 2025 and net income of $181.8 million in Q4 2025. The GAAP operating margin was negative 3.5%, dragged down by special items. Non-GAAP diluted earnings per share came in at $0.64, up from $0.55 in Q1 2025 and flat with Q4 2025.
Despite the net loss, onsemi repurchased $346 million worth of shares in the quarter, representing approximately 160% of free cash flow — an aggressive capital return posture that signals management's confidence in the longer-term trajectory.
Segment Performance
The Power Solutions Group was the standout performer, with revenue of $736.6 million, up 14% year-over-year and 2% sequentially. The Advanced Manufacturing Group brought in $540.4 million, down 5% year-over-year and 3% sequentially, while the Intelligent Sensing Group contributed $236.3 million, roughly flat year-over-year but down 5% from Q4 2025.
AI Data Center and Automotive as Growth Drivers
CEO Hassane El-Khoury pointed to the AI data center business as a particular bright spot, noting it grew more than 30% sequentially and more than doubled year-over-year, driven by broader adoption across the power tree with multiple chip vendors and leading hyperscalers. On the automotive side, onsemi highlighted expanded collaborations with Geely and NIO around its EliteSiC technology for 900V EV architectures, and reported initial production shipments of Treo-based Ethernet solutions supporting next-generation vehicle architecture at a leading North American OEM.
CFO Thad Trent noted that operating income grew 10% year-over-year, outpacing revenue growth by a factor of two — a metric the company is clearly proud of and which points to improving operating leverage as volumes recover.
Q2 Outlook
For the second quarter of 2026, onsemi guided revenue of $1.535 to $1.635 billion, a meaningful step up from Q1 at the midpoint. Non-GAAP diluted EPS is expected in the range of $0.65 to $0.77, implying continued earnings momentum. Non-GAAP gross margin is guided at 38.0% to 40.0%.
Why the Stock Is Down
The 4% pre-market decline likely reflects a combination of factors: the GAAP net loss, the slight sequential revenue dip from Q4, and perhaps expectations that had been set higher heading into the print. Semiconductor stocks also remain sensitive to broader macro and tariff concerns, which can amplify post-earnings moves even when underlying results are improving. The recovery narrative at onsemi is intact, but the market appears to want to see it move faster.
May 5, 2026
onsemi (Nasdaq: ON) is trading about 4% lower in Tuesday's pre-market session after the semiconductor maker reported its first quarter 2026 results following Monday's close. While the company beat its own guidance and painted an encouraging picture of recovery, a GAAP net loss and sequential revenue decline appear to be weighing on investor sentiment.
Q1 by the Numbers
Revenue came in at $1.513 billion, exceeding the midpoint of the company's guidance and up 5% compared to the first quarter of 2025. However, revenue slipped 1% sequentially from Q4 2025's $1.530 billion, a detail that may be giving markets pause.
Gross margin improved meaningfully year-over-year, reaching 38.5% on both a GAAP and non-GAAP basis, compared to just 20.3% on a GAAP basis in Q1 2025 — a sign that the operational restructuring underway at onsemi is having a real effect on the cost structure. Non-GAAP operating margin came in at 19.1%, up from 18.3% a year ago.
On a GAAP basis, however, the company reported a net loss of $33.4 million, or a loss of $0.08 per diluted share, compared to a loss of $486.1 million in Q1 2025 and net income of $181.8 million in Q4 2025. The GAAP operating margin was negative 3.5%, dragged down by special items. Non-GAAP diluted earnings per share came in at $0.64, up from $0.55 in Q1 2025 and flat with Q4 2025.
Despite the net loss, onsemi repurchased $346 million worth of shares in the quarter, representing approximately 160% of free cash flow — an aggressive capital return posture that signals management's confidence in the longer-term trajectory.
Segment Performance
The Power Solutions Group was the standout performer, with revenue of $736.6 million, up 14% year-over-year and 2% sequentially. The Advanced Manufacturing Group brought in $540.4 million, down 5% year-over-year and 3% sequentially, while the Intelligent Sensing Group contributed $236.3 million, roughly flat year-over-year but down 5% from Q4 2025.
AI Data Center and Automotive as Growth Drivers
CEO Hassane El-Khoury pointed to the AI data center business as a particular bright spot, noting it grew more than 30% sequentially and more than doubled year-over-year, driven by broader adoption across the power tree with multiple chip vendors and leading hyperscalers. On the automotive side, onsemi highlighted expanded collaborations with Geely and NIO around its EliteSiC technology for 900V EV architectures, and reported initial production shipments of Treo-based Ethernet solutions supporting next-generation vehicle architecture at a leading North American OEM.
CFO Thad Trent noted that operating income grew 10% year-over-year, outpacing revenue growth by a factor of two — a metric the company is clearly proud of and which points to improving operating leverage as volumes recover.
Q2 Outlook
For the second quarter of 2026, onsemi guided revenue of $1.535 to $1.635 billion, a meaningful step up from Q1 at the midpoint. Non-GAAP diluted EPS is expected in the range of $0.65 to $0.77, implying continued earnings momentum. Non-GAAP gross margin is guided at 38.0% to 40.0%.
Why the Stock Is Down
The 4% pre-market decline likely reflects a combination of factors: the GAAP net loss, the slight sequential revenue dip from Q4, and perhaps expectations that had been set higher heading into the print. Semiconductor stocks also remain sensitive to broader macro and tariff concerns, which can amplify post-earnings moves even when underlying results are improving. The recovery narrative at onsemi is intact, but the market appears to want to see it move faster.