ON Semiconductor (NASDAQ:ON) reported better-than-expected earnings for the fourth quarter, as revenue was in line with estimates but down from the same period a year earlier.
The semiconductor firm posted Q4 revenue of $1.53 billion, in line with analyst expectations.
Adjusted earnings per share came in at $0.64, exceeding expectations of $0.62.
For the full year, the company generated $1.8 billion in cash from operations and $1.4 billion in free cash flow, achieving a record high free cash flow margin of 24%, which was returned to shareholders through share repurchases.
“We remained disciplined in our execution and met expectations in the fourth quarter as we saw increasing signs of stabilization in our key markets,” ON Semiconductor CEO Hassane El-Khoury said. “We continue to invest in intelligent power and sensing technologies that position us to win in the most critical technology transitions shaping our industry.”
Looking ahead, the company expects first-quarter 2026 revenue of $1.49 billion at the midpoint, slightly below analyst projections of $1.51 billion. Adjusted EPS guidance for the quarter is $0.47 at the midpoint, under analysts’ estimate of $0.61.
Jefferies analysts maintained a ‘Buy’ rating on ON Semiconductor with a $73 price target, noting that growth in AI Data Centers is helping offset headwinds from non-core business exits and some industrial lumpiness.
The analysts noted that AI data center revenue is on a run-rate exceeding $400 million in Q1, while aggregate exits of roughly $300 million are expected across the March, June, and September quarters.
They highlighted modest improvement in auto and a target of over 40% gross margin by Q4, though they remain cautious on broader analog recovery trends.
“Overall, the outlook is largely unchanged despite the moving pieces,” the firm wrote.
Shares of ON Semiconductor added 4.3% on the results, trading at about $68.