ON Semiconductor: Overbought Ahead Of Slow Fundamental Recovery, Downgrade To Hold

While ON's AI data center revenue may double in 2026, it remains a small portion of total revenues, with top-line impact from new design wins expected mainly from 2027 onward. Their FQ1'26 performance and the FQ2'26 guidance appear to be underwhelming as well, with the recent rally occurring overly fast and furious. ON's anticipated AI-driven growth prospects have already been priced into the premium P/E of 35.1x, beyond historical means, while triggering a minimal margin of safety.