ON Semiconductor’s shares plummeted nearly 9% in pre-market trading to $51.76 after mixed Q2 2025 results revealed severe profitability pressures. While revenue edged past expectations at $1.47 billion (versus $1.45 billion forecasts), earnings per share of $0.53 marked a steep drop from $0.78 year-over-year. The gross margin collapse—from 45.3% to 37.6%—and a 70% free cash flow decline to $106.1 million spooked investors. The automotive segment, a key revenue driver, fell 4% quarter-over-quarter despite 23% growth in China’s EV market, with Europe and North America lagging.
AI Data Centers Offer Cautious Optimism
Management anticipates Q3 revenue between $1.465–1.565 billion, but EPS guidance of $0.54–0.64 missed analyst targets, fueling skepticism. Bright spots include a doubling of AI data center revenue and partnerships with industry leaders to develop next-gen power architectures. The firm maintains ambitious 2027 targets: 10–12% annual growth and 53% gross margins, driven by silicon carbide technology. However, the stock’s plunge reflects market doubts about achieving these goals amid current margin erosion.
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