ON
New boss, same semiconductor? Not quite
ON Semiconductor is trying to stretch way beyond its old auto-and-industrial lane. At its Investor Day, management pitched a bigger future built around AI data centers, physical AI, and power technologies — basically, the plumbing that keeps the AI monster fed.
J.P. Morgan’s Harlan Sur came away sounding pretty upbeat. His takeaway: ON’s portfolio is broader than the market may be giving it credit for, and the company is now selling a systems story, not just a parts story.
Power density: the new villain in the AI plot
CEO Hassane El-Khoury framed the next AI bottleneck as power density. Translation: it’s not just about stuffing more chips into a rack anymore. It’s about getting more electricity into less space, without turning the whole setup into a toaster.
That matters because ON is targeting the full "grid-to-rack-to-chip" chain, which gives it a shot at grabbing more wallet share as AI infrastructure scales.
Management says:
- AI data center revenue could grow more than 50% annually from 2026 through 2030
- That business could rise from over $500 million in 2026 to more than $2.5 billion by 2030
- Content per AI rack could jump from about $15,000 today to roughly $115,000 by 2030
- A new Vcore design win should start contributing by the end of 2026
Why investors are paying attention
J.P. Morgan said ON’s updated targets could support earnings of roughly $10 to $11 per share by 2030, versus the $8 Wall Street currently expects. That’s the kind of gap that makes stock pickers sit up a little straighter.
The company is also aiming for:
- 12% to 14% revenue CAGR from 2026 through 2030
- Gross margins around 53%
- Operating margins near 38%
- Free cash flow margins of 30% to 35%
Big picture: ON is basically telling investors it wants to be more than a cyclical chip supplier. If AI infrastructure keeps eating power like a teenager after soccer practice, ON thinks it’s got a seat at the table.