NEW YORK, August 3, 2026, 17:04 EDT — ON Semiconductor shares rose in the wake of a better-than-expected second quarter, while the company’s cash flow increase came with a caution regarding working capital.
- U.S. markets have ended the regular session, but after-hours trading is still in progress.
- ON shares were at $83.50 as of 5 p.m., rising 3.9% from the previous session’s close.
- Sales and margins are expected to continue rising in the third quarter, based on midpoint guidance.
Shares of ON Semiconductor Corporation NASDAQ:ON climbed after hours on Monday after the company’s second-quarter revenue and adjusted profit surpassed analysts’ estimates. ON Semiconductor also projected a further sequential increase in revenue.
Revenue totaled $1.604 billion, surpassing the consensus estimate of $1.589 billion. Adjusted earnings stood at 74 cents per share, compared with the expected 71 cents.
Investors may find more value in free cash flow than in earnings. Free cash flow climbed by $319.3 million compared to the previous year, totaling $425.4 million. That represents a fourfold increase over the same period last year.
However, working-capital shifts rose $244.4 million compared to the previous year. Capital expenditures declined $43.9 million. Combined, these factors made up 90% of the growth in free cash flow. Part of these cash gains may not recur.
Core profits increased further. Adjusted operating margin climbed by 350 basis points, and earnings increased 40%. Revenue advanced 9%.
Q2 performance scorecard
| Metric | Q2 2026 | Q1 2026 | Q2 2025 | Year-on-year |
|---|---|---|---|---|
| Revenue | $1,603.5 mln | $1,513.3 mln | $1,468.7 mln | up 9.2% |
| Adjusted gross margin | 39.3% | 38.5% | 37.6% | rise of 170 bp |
| Adjusted operating margin | 20.8% | 19.1% | 17.3% | up 350 bp |
| Adjusted EPS | $0.74 | $0.64 | $0.53 | increase of 39.6% |
| Free cash flow | $425.4 mln | $217.2 mln | $106.1 mln | up 301% |
Data reported by the company; variations based on disclosed figures.
Chief Executive Hassane El-Khoury stated, “AI data center remains our fastest-growing business.” The company’s leadership anticipates revenue in this segment will more than double in 2026. Stock Titan
The cash-flow bridge illustrates the importance for investors of distinguishing between earnings leverage and conversion.
Cash flow analysis
| $ millions | Q2 2026 | Q2 2025 | Change |
|---|---|---|---|
| Net profit | 227.5 | 171.7 | +55.8 |
| Asset and liability adjustments | +44.6 | -199.8 | +244.4 |
| Cash generated from operations | 459.7 | 184.3 | +275.4 |
| Capital expenditures | -34.3 | -78.2 | +43.9 |
| Free cash generation | 425.4 | 106.1 | +319.3 |
The revised capex signals reduced cash outflow. Figures are based on company information.
Inventory remained almost unchanged from the previous quarter at $2.05 billion. Accrued liabilities climbed by $102.3 million, and receivables went up by $34.4 million. The release lists working capital solely as a single figure under cash flow.
Cash and equivalents increased by $1.51 billion compared with March. Yet, onsemi raised $1.47 billion in debt over the quarter. The rise in cash was not entirely from operations.
Sales recovered mainly due to power semiconductors. Power Solutions Group accounted for almost 52% of revenue for the quarter.
Business group revenue
| Business group | Q2 revenue | Revenue share | Sequential | Year-on-year |
|---|---|---|---|---|
| Power Solutions | $829.0 mln | 51.7% | up 13% | up 19% |
| Analog and Mixed-Signal | $545.7 mln | 34.0% | up 1% | down 2% |
| Intelligent Sensing | $228.8 mln | 14.3% | down 3% | up 7% |
| Total | $1,603.5 mln | 100% | up 6% | up 9% |
Company data was used to determine revenue shares.
Power Solutions accounted for 97% of the company’s net sales growth compared to the previous year. Revenue from Analog and Mixed-Signal continued to trail last year’s figures.
For the third quarter, management forecasts revenue in the range of $1.65 billion to $1.75 billion, indicating ongoing leverage.
Q3 forecast
| Metric | Q2 actual | Q3 guidance | Midpoint versus Q2 |
|---|---|---|---|
| Revenue | $1.604 bln | $1.65–$1.75 bln | +6.0% |
| Adjusted gross margin | 39.3% | 40.0%–42.0% | +170 bp |
| Adjusted EPS | $0.74 | $0.81–$0.93 | +17.6% |
Company guidance served as the basis for the midpoint changes calculation.
The ranges generally matched what analysts had anticipated. Tuesday’s regular session will show if improvements in margins are offset by questions about cash quality.
Onsemi bought back $332 million in shares in the quarter, representing about 78% of its free cash flow. Shareholder returns since the start of the year have totaled approximately 105% of free cash flow.
The stock dropped 9.7% over the last five sessions ahead of its earnings report. Prior to the after-hours action, it had gained 48.5% in 2026.
Risks: As working capital returns to typical levels, cash conversion may decline. The announced $7 billion all-share acquisition of Synaptics Inc. NASDAQ:SYNA brings with it risks related to integration, regulatory clearance, and potential dilution. The transaction is anticipated to complete in mid-2027, pending both regulatory and shareholder approval.
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