ON Semiconductor Corporation (ON): A Bull Case Theory

We came across a bullish thesis on ON Semiconductor Corporation on CopyCat Invest’s Substack. In this article, we will summarize the bulls’ thesis on ON. ON Semiconductor Corporation’s share was trading at $58.05 as of July 30^th. ON’s trailing and forward P/E were 40.31 and 25.84, respectively according to Yahoo Finance.

Despite a sharp pullback in the stock following cautious reports from peers like Texas Instruments (TXN), NXP (NXPI), and STMicroelectronics (STM), the author sees a differentiated setup for ON. The broader semiconductor space faces uncertainty around the pace of recovery and supply chain normalization, but ON’s multi-year manufacturing optimization and recent cost restructuring, announced in Q4 2024, provide a foundation for improving fundamentals.

The company is expected to begin realizing solid free cash flow as it works through elevated inventories that were strategically accumulated to support its fab transitions. While the market appears ready to punish ON’s upcoming earnings report, this negative sentiment may have already been priced in, creating a favorable entry point. The author acknowledges the risk of further downside but is prepared to add more if the stock weakens post-earnings.

From a valuation perspective, ON is no longer as inexpensive on a trailing earnings basis as it was near previous highs—a typical trait of cyclical semiconductor stocks—but remains considerably cheaper than TXN, which trades near all-time highs despite meaningful earnings declines. Moreover, ON’s operational resilience and differentiated trajectory stand out versus peers like STM, whose recent performance has been weaker.

The author sees the current setup as a compelling opportunity to build exposure to a company with improving cash generation, margin tailwinds, and an attractive relative valuation within the semiconductor landscape.

Previously, we covered a bullish thesis on ON Semiconductor Corporation (ON) by Charly AI in January 2025, which highlighted the company’s exposure to EVs, industrial automation, and clean energy. The company’s stock price has appreciated by approximately 4.38% since our coverage. This is because the thesis hasn’t fully played out yet. The thesis still stands as long-term fundamentals remain intact. Copycat shares a similar view but emphasizes near-term resilience and valuation.

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Disclosure: None.