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Goldman Sachs on ON Semiconductor: Investor Day Targets Solid, Neutral — $95 TP

Posted on by Eben@CANSLIM Research
Eben@CANSLIM Research's avatarEben@CANSLIM Research

Goldman Sachs has reiterated its Neutral rating on ON Semiconductor Corp. (ON) with a 12-month price target of $95, arguing the stock’s 9% fall after the company’s Investor Day was overdone given elevated expectations heading into the event. The broker describes onsemi’s 2030 financial targets as very solid, if slightly short of the most bullish hopes, and says the company made a strong case for benefiting from power-semiconductor growth tied to AI datacentres and physical AI.

Key Takeaways

  • Goldman Sachs rates ON Semiconductor Corp. (ON) Neutral with a 12-month price target of $95, implying 42.6% upside from a price of $66.60.
  • ON Semiconductor guided to a 2026-30 revenue CAGR of 12%-14%, reaching roughly $11bn by 2030, with a 53% gross margin, ~38% operating margin and more than $3.5bn of free cash flow.
  • Management expects AI datacentre revenue to double year-on-year in both 2026 and 2027, growing from about $500mn in 2026 to roughly $2.5bn in 2030.
  • ON Semiconductor sees content per AI rack rising from about $15,000 to about $115,000 as architectures shift to higher-voltage distribution, solid-state transformers and vertical GaN.
  • The company plans to return 100% of free cash flow to shareholders while holding capital intensity at about 5%.

What Goldman Sachs Said About ON Semiconductor’s Investor Day

In a report titled “ON Semiconductor Corp. (ON): Investor Day highlights 2030 financial targets, growth in power products, and the outlook for automotive,” Goldman Sachs analyst James Schneider and colleagues write that the 9% share price decline following the New York event looks excessive relative to the expectations that had built up beforehand. The team views the 2030 targets as slightly ahead of the Street but potentially just below the most bullish forecasts, and argues the company set out a credible case for capturing secular growth in power semiconductors linked to both AI datacentres and physical AI.

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