onsemi Posts Earnings of $0.90 per Share, Beating Third-Quarter Estimates
Key Facts
onsemi posted adjusted non-GAAP earnings of $0.90 per share in the third quarter of 2026, topping analysts’ estimate of $0.87, while revenue reached $1.72 billion against expectations of $1.70 billion, according to data cited by Investing.com. The company reported results on November 2, after the regular session closed with its shares at $70.11, down 2.18%. The stock fell 2.97% to $68.03 in after-hours trading, according to Investing.com. Operating performance was supported by accelerating revenue from AI data centers, while the company issued fourth-quarter guidance that included further growth in margins and earnings per share. But the after-hours decline showed that beating third-quarter estimates was not enough to lift the stock in trading after the announcement.
Revenue was $1,722.3 million in the third quarter, compared with $1,603.5 million in the second quarter and $1,550.9 million in the same period of 2025, up 7% quarter over quarter and 11% year over year, according to the company’s statement. The chief executive said revenue, gross margin and earnings per share exceeded the midpoint of the guidance range the company had previously set. He added that AI data center revenue rose 39% from the previous quarter and 175% from the third quarter of last year. The statement described growth in this business as part of a broader improvement in the company’s results, coinciding with higher overall revenue and wider margins. The year-over-year comparison shows that the data center business grew much faster than overall revenue during the period.
Unadjusted gross margin under non-GAAP rose to 41.2% in the third quarter, from 39.3% in the second quarter and 38.0% in the third quarter of 2025. The chief financial officer said the margin had expanded for the fifth consecutive quarter, extending an improvement that began before the latest period. Free cash flow was $489 million, up 31% year over year, equivalent to 28% of revenue. The company’s figures show improved margins and cash generation alongside sales growth. The chief executive said revenue, margin and earnings per share exceeded the midpoint of the guidance range, linking the performance to accelerating demand and customers’ adoption of the company’s products in data center and industrial markets.
By contrast, automotive revenue fell 1% quarter over quarter to $777 million. The company said reallocating supply to the data center and industrial sectors contributed to the decline, while the chief executive said some technology segments remained supply constrained. He added that the company made a short-term decision during the third quarter, which continued into the fourth quarter, to direct supply to markets where it sees strong end demand, including AI data centers and the industrial sector. This reflects a trade-off in allocating production capacity across different markets, as automotive activity declined during the quarter. The company said it expects automotive revenue to fall by a high single-digit percentage in the fourth quarter, before returning to normal levels in the first quarter of 2027 as supply arrives.
For the fourth quarter of 2026, the company expects an unadjusted non-GAAP gross margin of between 41.5% and 43.5%, and diluted earnings per share of between $0.95 and $1.07. It also expects industrial-sector revenue to rise by a low double-digit percentage in the same quarter, according to the earnings call transcript. The guidance combines continued growth in the industrial sector with an expected decline in automotive revenue, which the company said would return to normal levels in the first quarter of 2027 as supply arrives. The fourth-quarter earnings-per-share range is above the adjusted result of $0.90 recorded in the third quarter. The margin outlook points to a range above the third-quarter margin of 41.2%.
In a parallel move to strengthen its power and data center businesses, onsemi announced an agreement to acquire Ferric for $600 million in cash, plus up to $175 million contingent on meeting revenue targets. The company said it raised its 2030 AI data center revenue target by $500 million to more than $3 billion. The chief executive also linked accelerating demand to higher power requirements and customers’ adoption of the company’s products in data center and industrial markets. The deal and higher target come alongside the redirection of supply toward markets where the company sees strong demand, while automotive revenue faces an expected weakness in the fourth quarter. The fourth-quarter guidance and the timing of automotive supply returning to normal levels in the first quarter of 2027 remain the company’s key upcoming milestones.