Is ON Semiconductor Stock Worth Holding Through the Downturn? Critical Earnings Miss Signals Deeper Trouble

ON Semiconductor has become a cautionary tale in the semiconductors sector this year. The company’s shares have plummeted 43% over six months—a far steeper decline than both the broader Computer & Technology sector’s 5.9% drop and the Semiconductor - Analog and Mixed industry’s 24% pullback. Even direct competitors like Magnachip Semiconductor, NXP Semiconductors and Analog Devices have weathered the storm better, with respective losses of 24.5%, 20.4% and 14.4%.

Revenue Collapse Across Multiple Business Lines

The core problem is unmistakable: ON Semiconductor’s fundamental business is contracting faster than peers. Fourth-quarter 2024 results revealed the depth of the challenge. The Power Solutions Group saw revenues plunge 16% year-over-year, while the Analog and Mixed-Signal segment experienced a sharper 18% decline. Even the relatively steadier Intelligent Sensing Group couldn’t escape pressure, posting a 2% drop.

Combined, these segments drove an overall 15% year-over-year revenue contraction—a double-digit miss that signals both cyclical weakness and company-specific operational challenges. Management’s guidance suggests these headwinds won’t quickly reverse.

Automotive Demand Cliff Looms

The automotive sector, historically a growth driver for semiconductors companies, has become a major vulnerability for ON. Geopolitical tensions, supply-chain friction and disappointing EV adoption rates have collided to create perfect storm conditions. Automakers are recalibrating production schedules downward as consumer demand softens and macroeconomic uncertainty persists.

ON’s own forecast for Q1 2025 reflects this deterioration: the company expects automotive revenues to drop 25% or more sequentially, with weakness in China being the primary culprit. This sequential cliff—rather than the gradual decline investors might have hoped for—raises questions about visibility into recovery timing.

Earnings Estimates Sliding Lower Across the Board

Wall Street has lost confidence in ON Semiconductor’s near-term trajectory. For Q2 2025, consensus earnings estimates sit at 53 cents per share—down 7% in just 30 days and representing a 44.79% year-over-year decline. Revenue expectations are equally grim: Q2 2025 consensus revenue of $1.43 billion implies a 17.57% drop from the prior-year quarter.

Looking at the full year, the picture doesn’t brighten. The 2025 revenue consensus of $6.07 billion would represent a 14.3% year-over-year decrease. More alarming, full-year 2025 EPS estimates have been trimmed to $2.49 per share—a 37.44% plunge year-over-year and down 4.2% just over the past month. The trajectory of estimate revisions suggests further downgrades may be in the pipeline.

The Path Forward Remains Murky

ON Semiconductor’s management hasn’t abandoned hope. The company is investing in silicon carbide production expansion and positioning itself for longer-term growth in high-value markets. If these strategic initiatives gain traction, a recovery is theoretically possible.

However, execution risk is substantial given current market conditions and the uncertain timing of automotive stabilization. Near-term investors face a classic value trap scenario: lower stock price, but potentially deteriorating fundamentals. The company carries a Zacks Rank #5 (Strong Sell) rating, reflecting analyst caution.

The semiconductors news cycle will likely remain volatile for ON until meaningful signs of stabilization emerge in auto demand and core segment revenues.