ON Semiconductor (NASDAQ:ON) shares climbed 7.6% in pre-market trading after the chipmaker reported second-quarter 2026 results that exceeded Wall Street forecasts and issued a stronger-than-expected outlook for the current quarter.
The company posted non-GAAP earnings of $0.74 per share, ahead of analyst expectations of $0.71, while revenue reached $1.60 billion, slightly above the consensus estimate of $1.59 billion. Sales also increased 9% compared with the same period last year.
Margin Expansion Continues
ON Semiconductor delivered another quarter of improving profitability, with its non-GAAP gross margin increasing by 80 basis points from the previous quarter to 39.3%.
The latest result marked the fourth consecutive quarter of sequential gross margin expansion.
Cash generation also remained strong, with operating cash flow improving significantly and free cash flow reaching $425.4 million during the quarter.
Third-Quarter Forecast Tops Consensus
Investor sentiment received an additional boost after management issued guidance that exceeded market expectations.
ON Semiconductor expects third-quarter revenue of between $1.65 billion and $1.75 billion, with the midpoint of $1.70 billion sitting above analysts’ consensus forecast of approximately $1.67 billion.
The company also expects gross margin to improve further, forecasting a range of 40% to 42% for the third quarter.
AI Demand Continues to Drive Growth
Chief Executive Hassane El-Khoury highlighted artificial intelligence infrastructure as the company’s fastest-growing business.
“AI data centers remain our fastest-growing segment, and we now expect revenue to double in 2026,” he said, pointing to new partnerships with NVIDIA MGX, Great Wall and AWS.
The company also repurchased $332 million of its own shares during the quarter, a move that signals management’s confidence in the business and its long-term prospects.
Technology Rally Adds to Positive Momentum
The broader market environment also supported semiconductor stocks.
The Nasdaq gained 0.7%, while the S&P 500 and Dow Jones Industrial Average each advanced 0.2%, extending the technology sector’s recovery after a volatile July. The previous trading session had already seen a broad-based rally in technology shares, creating a favourable backdrop ahead of ON Semiconductor’s earnings announcement.
Following the results, ON Semiconductor shares traded around $86.50 in pre-market dealings, well above the previous closing price of $80.40. Although the stock remains below its 52-week high of $134.92, it has staged a strong recovery from its 52-week low of $44.56.
ON Semiconductor stock price
