Onsemi (NASDAQ:ON) reported stronger-than-expected first quarter results, supported by continued strength in AI data center demand and improving trends in industrial markets, alongside a gradual recovery in automotive.
The semiconductor company posted adjusted earnings of $0.64 per share on revenue of $1.51 billion, compared with consensus estimates of $0.61 per share and $1.49 billion in revenue.
Management pointed to accelerating demand in artificial intelligence-related infrastructure as a key driver of the results. “Our AI data center business accelerated, growing more than 30% sequentially,” Onsemi CEO Hassane El-Khoury said. “We have moved beyond the cyclical trough on a path to recovery.”
El-Khoury added that increasing semiconductor content across key end markets remains a long-term growth driver, particularly in automotive, industrial and AI data center applications.
Jefferies analysts described the quarter as showing “broad-based improvement,” with continued strength in the AI data center business and early signs of stabilization in other segments.
The firm noted that AI data center revenue grew more than 30% sequentially, outpacing internal expectations, and remains a key driver of near-term growth as content per accelerator continues to rise.
According to Jefferies, the industrial segment also posted a second consecutive quarter of strength, led by energy storage and microgrid demand, which the firm said is growing at around 40% year over year and approaching a 60% market share in that subsegment.
The analysts said automotive performance remains mixed, describing it as broadly soft, though improving sequentially. They noted that auto revenue returned to year-over-year growth for the first time since March 2024, with shipments tracking end-demand rather than inventory replenishment. Regional strength was concentrated in China, while North America and Europe remained weaker.
Jefferies also highlighted improving supply chain dynamics, including extended lead times rising from 23 weeks in the prior quarter to 26 weeks, and a more constructive pricing environment that could support gross margins in the second half of 2026.
The firm added that AI data center growth remains the standout segment, with expectations for continued strong sequential gains and potential for doubling in calendar 2026, though it suggested current market expectations may be conservative.
For the second quarter, Onsemi guided revenue above consensus at approximately $1.59 billion, alongside improved margins and earnings. Jefferies noted that guidance reflects continued strength in AI data center demand offsetting softer automotive trends, with industrial performance expected to remain solid.
Shares of Onsemi were little changed following the report, trading hands at $102.