ON Semiconductor’s (NASDAQ: ON), which operates under the Onsemi brand, stock price action was mixed following its Q4 2025 earnings report and guidance update, but the initial sell-off proved to be a head fake. While results and guidance left some to be desired relative to consensus forecasts, they affirmed the company’s return to growth, expectation for margin improvement, free cash flow growth, and capital return.
Free cash flow is a significant factor for this company, as its balance sheet is a fortress, enabling it to use 100% of free cash flow for buybacks. Investors have to assume that a return to revenue growth compounded by wider margins and accelerated earnings growth will lead to accelerating buyback activity and a strengthening tailwind for ON share prices.
As it stands, the 2025 free cash flow margin was a company record, setting the company up for accelerated earnings growth upon revenue recovery. The buyback activity in 2025 decreased the total by over 6.3%, and a strong pace is expected to continue in 2026. The board authorized an additional $6 billion in total buybacks during the quarter, equating to more than 20% of the market cap, as of mid-February, likely to be used up within the subsequent three years.
Onsemi Is on Track for Business Inflection This Year
Onsemi’s Q4 results were mixed, with revenue falling short of MarketBeat’s reported consensus and earnings outperforming. However, the top-line miss was slim and the 11.6% contraction expected; the critical details include margin performance, signs of stabilization in end markets, strength in the data center business, and the forecast for 2026. Segmentally, the Intelligent Sensing Group performed strongest, growing by 9% year-over-year, while Power Solutions Group and Analog & Mixed Signal contracted.
Margin news is good. The company experienced an expected margin contraction tied to revenue deleveraging, but quality improvements were better than forecast. The net result is that margins contracted less than expected, leaving adjusted earnings at 64 cents, 2 cents better than forecast. Looking forward, the guidance is also favorable, including an outlook for modest single-digit growth in fiscal Q1, accelerating throughout the year, and compounded by margin improvement. Q1 earnings are forecast to rise 11% by execs, while analysts forecast growth accelerating into the 20% range in Q2 and the 30% range for Q3.
Analysts' Sentiment Firms: Onsemi Support Base Strengthens
The analysts' sentiment is mixed, with several price target reductions offset by upgrades and price target increases triggered by the guidance update. The takeaways include the firm consensus Hold rating, 28 analysts cover the stock, and post-release revisions align with the consensus.
Consensus is just over $67, suggesting ON stock is fairly valued near its critical resistance point. The question now is whether ON analysts are more or less likely to strengthen their sentiment in upcoming quarters, and the likely answer is yes. Onsemi may not be growing robustly, but it is growing and at the start of a cyclical upswing in high-performance intelligent semiconductor products for industrial applications.
Institutions pose risks for investors and ON stock prices. The group owns more than 97% of the stock and is a formidable market force, capable of lifting or capping price action. They sold on balance in 2025, running an aggressive balance that kept the market under pressure. Activity reverted to buying in early 2026 and provides some support, but may revert to distribution as share prices advance.
Onsemi Stock Price Action Amid Reversal
Onsemi’s stock price action has been rebuilding its support base and preparing for a reversal for over 12 months. The story in early 2026 is that this market is on the brink of crossing a critical resistance point, aligning with 2024’s support targets, which were broken in early 2025. The indications are bullish, suggesting the move is imminent, but there are risks. This market has several congestion points that will create volatility as price action rises, potentially catalyzing price corrections at the $80 and $90 levels.
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The article "Onsemi Is Near a Breakout—And Free Cash Flow Could Fuel It" first appeared on MarketBeat.
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