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Is ON a good stock to buy? We came across a bullish thesis on ON Semiconductor Corporation on Valueinvestorsclub.com by Value1929. In this article, we will summarize the bulls’ thesis on ON. ON Semiconductor Corporation's share was trading at $93.30 as of April 28th. ON’s trailing and forward P/E were 338.07 and 33.78 respectively according to Yahoo Finance.

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ON Semiconductor Corporation provides intelligent sensing and power solutions in Hong Kong, Singapore, the United Kingdom, the United States, and internationally. ON is positioned as a leveraged play on the accelerating power demands of AI data centers, offering a differentiated angle on the next-generation architecture shift tied to NVIDIA’s Rubin platform expected in the second half of 2026.

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While the market continues to view ON through the lens of cyclical weakness in automotive and industrial end markets, this perspective underappreciates a structural inflection driven by rising power density in AI systems.

As server power requirements scale from historical levels of ~3kW to 12–20kW+, traditional bottom-cooled designs are becoming thermally unviable, creating a bottleneck that ON’s proprietary T2PAK top-side cooled packaging directly addresses. This technology enables efficient heat dissipation while maintaining compatibility with high-volume manufacturing through optical inspection advantages, positioning it as a preferred solution for hyperscalers and next-generation AI infrastructure.

The company has already begun shipping these products to leading customers, with its AI thermal segment growing approximately 100% year-over-year and expected to sustain that trajectory into 2026, while delivering materially higher margins of 55–60% compared to its legacy 25–35% profile. As ON strategically exits low-margin businesses and reallocates capacity toward AI-driven demand, utilization rates are expected to recover from current trough levels, unlocking significant operating leverage.

Management indicates that normalization toward ~80% utilization could drive up to 900 basis points of gross margin expansion, supporting a path back to long-term targets above 50%. This combination of mix shift, utilization recovery, and structural demand tailwinds creates a compelling setup for both earnings expansion and valuation re-rating.

Previously, we covered a bullish thesis on ON Semiconductor Corporation (ON) by Charly AI in January 2025, which highlighted the company’s positioning across automotive, industrial, and energy markets, alongside cyclical headwinds and long-term recovery potential. ON’s stock price has appreciated by 67.77% since our coverage. Value1929 shares a similar view but emphasizes on AI-driven power demand and margin expansion from advanced thermal packaging.

ON Semiconductor Corporation is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 63 hedge fund portfolios held ON at the end of the fourth quarter which was 45 in the previous quarter. While we acknowledge the risk and potential of ON as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ON and that has 10,000% upside potential, check out our report about this cheapest AI stock.

Disclosure: None.