onsemi Targets $11 Billion Revenue by 2030 on AI Power Demand

ON Semiconductor told investors on Sept. 16 that it now expects revenue to grow at a 12% to 14% compound annual rate through 2030, reaching roughly $11 billion by the end of the period. The Scottsdale, Arizona-based chipmaker, known as onsemi, used its long-awaited 2026 Financial Analyst Day to put AI data centers at the center of its next growth phase, alongside automotive, industrial electrification and a new Embedded Power Platform (EPP).

The market's initial reaction was skeptical. ON stock, already down sharply from its record highs, slid 9% on the day of the event as investors weighed the ambitious targets against execution and margin questions. Shares have since moved higher. The stock now trades near $72, roughly 47% below its 52-week high of $134.92, after losing 41% over the past three months. Zoom out, and the picture reverses: ON remains up 40% over the past 52 weeks and 32% year-to-date, helped by a cyclical recovery, rising demand for AI data-center power chips and stronger financial results.

The recent selloff has several layers. The $7 billion all-stock Synaptics acquisition sparked dilution and integration concerns, and investors questioned how quickly the deal and the AI ambitions would translate into earnings. Broader semiconductor volatility and higher interest rates added pressure. The 14-day RSI sits around 45, indicating selling pressure has eased but the stock is not yet in traditionally oversold territory.

The Business

ON Semiconductor develops intelligent power and sensing solutions for EVs, AI data centers, industrial equipment and energy infrastructure. Its market capitalization stands at roughly $27.2 billion. The company holds a strong position in automotive image sensors for advanced driver-assistance systems and runs a vertically integrated silicon carbide supply chain. Its "Fab Right" manufacturing strategy concentrates capital where it can generate attractive returns.

After the pullback, valuation looks more reasonable. The stock trades at roughly 21.6 times forward earnings, below the sector average. The price-to-sales ratio of 4.5 times, however, remains above the sector average — meaning the market is still pricing in meaningful growth.

Q2 Momentum

In August, onsemi reported second-quarter revenue of $1.6 billion, up 9% year-over-year, with adjusted EPS climbing 40% to $0.74. Both figures beat expectations.

The Power Solutions Group led the way, with revenue jumping 19% annually and 13% sequentially to $829 million, driven by demand for AI data-center power products. Analog and Mixed Signal revenue slipped 2% year-over-year to $546 million but edged up 1% sequentially. Intelligent Sensing revenue rose 7% year-over-year to $229 million, though it declined 3% from the previous quarter.

Factory utilization increased to 83% from 77% in the prior quarter as the company ramped production to work through a growing backlog. Onsemi spent about $34 million on capex, generated $425 million in free cash flow — nearly four times the year-ago level — returned $332 million via buybacks, and ended the quarter with $3.9 billion in cash, equivalents and short-term investments.

During the quarter, the company expanded its role in Nvidia's MGX ecosystem by supplying advanced power systems for next-generation AI servers and secured two power-supply platform wins from Great Wall in China. Management expects AI data-center-related silicon carbide revenue to rise more than 60% year-over-year in 2026.

For Q3, the company guides to revenue of $1.65 billion to $1.75 billion and adjusted EPS of $0.81 to $0.93. Analysts forecast EPS of $3.23 for fiscal 2026, up 37%, then $4.50 in fiscal 2027, a further 39% increase.

The 2030 Ambition

Management expects AI data-center revenue to more than double in 2026 and double again in 2027, potentially rising from about $500 million in 2026 to more than $2.5 billion by 2030. The company expects this business to grow at least 10 percentage points faster than the broader AI data-center market — at least 50% annually assuming roughly 40% market growth. Semiconductor content per AI rack is projected to climb from about $15,000 to more than $115,000 as the industry shifts toward higher-voltage power architectures.

Automotive is targeted to grow roughly 9% annually through 2030, industrial around 10%, and emerging physical-AI applications could represent a $6 billion addressable market.

The financial targets are equally aggressive: 53% gross margin, 38% operating margin and capital intensity of about 5% of revenue by 2030. ON highlighted $8.7 billion invested over the past five years, including $3.6 billion in R&D and $4.3 billion in capex.

The headline technology announcement was the EPP, which integrates silicon, silicon carbide and gallium nitride into a wafer-level architecture. ON says the platform can deliver three to five times higher power density for applications spanning AI infrastructure and EVs.

CEO Hassane El-Khoury said power is now the last major bottleneck to scaling AI data centers, following earlier constraints around compute and memory. Solving it, he explained, will require existing technologies, products and systems working together to deliver greater power density and efficiency. Management estimates a $213 billion total addressable market, much of it tied to power.

Analysts Stay Measured

Stifel cut its price target to $75 from $90 while keeping a "Hold" rating, citing uncertainty around the near- to medium-term gross-margin trajectory. UBS kept a "Neutral" rating and a $95 target, saying ON presented a case for double-digit annual revenue growth that largely matched expectations, though investors may have been looking for more. Mizuho maintained an "Outperform" rating while trimming its target to $95 from $110.

Wall Street's consensus stands at "Moderate Buy": of 28 analysts, nine recommend "Strong Buy," two "Moderate Buy" and 17 "Hold." The mean price target of $102 implies 42% upside; the Street-high target of $150 implies a 109% rally.

With the stock down nearly half from its highs but still priced for growth on sales, the burden now shifts to onsemi converting its $2.5 billion AI data-center ambition into the 53% gross margin it has promised for 2030.