ON Semiconductor (NASDAQ:ON) Q2 2026: EPS Grows 4x Faster Than Revenue, Free Cash Flow Quadruples

Onsemi (NASDAQ: ON) reported Q2 2026 results in which adjusted EPS grew 39.6% year-over-year to $0.74, matching the $0.74 consensus estimate, while revenue rose 9.2% to $1,603.5 million. The company raised its full-year AI data center revenue outlook, now projecting that segment to more than double in 2026.

Q2 2026 Results

• Revenue: $1,603.5 million, up 9.2% from $1,468.7 million in Q2 2025, and up 6% sequentially from $1,513.3 million in Q1 2026
• GAAP EPS: $0.56, up 36.6% from $0.41 in Q2 2025; adjusted EPS of $0.74, up 39.6% from $0.53
• GAAP gross margin: 38.4%, up 80 basis points from 37.6% in Q2 2025; non-GAAP gross margin 39.3%, up 170 basis points year-over-year
• GAAP operating margin: 16.1%, up 290 basis points from 13.2% in Q2 2025; non-GAAP operating margin 20.8%, up 350 basis points
• Free cash flow: $425.4 million, with free cash flow margin expanding from approximately 7% to 27% year-over-year

What Drove the Results

Adjusted EPS of $0.74 matched the $0.74 consensus estimate precisely, with a +0.5% surprise. The headline story is the operating leverage: EPS grew roughly four times faster than revenue (39.6% vs. 9.2%), reflecting gross margin expansion and disciplined cost management, per the company's press release. Free cash flow of $425.4 million quadrupled year-over-year as the free cash flow margin widened from approximately 7% to 27%.

The Power Solutions Group (PSG) led segment performance, with revenue of $829.0 million, up 19% year-over-year and 13% sequentially. The Automotive and Mixed Signal Group (AMG) generated $545.7 million, down 2% year-over-year. The Intelligent Sensing Group (ISG) contributed $228.8 million, up 7% year-over-year.

On the strategic front, onsemi announced the planned acquisition of Synaptics, expanding capabilities in connected compute at what it described as accretive gross margins. The company also launched GaNEXUS, a gallium nitride power portfolio spanning 40V to 650V targeting AI data centers, robotics, and industrial infrastructure. Additional wins included an expanded role in NVIDIA's MGX ecosystem and strategic AI data center platform wins with Great Wall, a leading China cloud infrastructure power supplier.

For Q3 2026, onsemi issued guidance of $1,650 million to $1,750 million in revenue, with GAAP diluted EPS of $0.79 to $0.91 and non-GAAP diluted EPS of $0.81 to $0.93. GAAP gross margin is guided to 39.9% to 41.9%. The company also repurchased $332 million in shares during the quarter, bringing year-to-date shareholder returns to approximately 105% of free cash flow.

Wall Street View

Truist noted that onsemi's AI momentum is outpacing its broader financial results, pointing to cyclical recovery alongside growing AI and data center demand. Shares closed at $80.78 on Tuesday, August 4, 2026, a gain of 0.47%, while the S&P 500 gained 1.80%.

Investor Takeaway

The most forward-looking element of these results is the raised AI data center outlook, with management now projecting that revenue from that segment will more than double in 2026, a target underpinned by the GaNEXUS launch and new wins within the NVIDIA MGX ecosystem. The Q3 gross margin guidance of 39.9% to 41.9% GAAP implies continued margin expansion beyond the 38.4% posted in Q2, which, if realized, would extend the earnings-growth-outpacing-revenue trend into a third consecutive quarter. The Synaptics acquisition adds a connected compute dimension to what has been primarily a power and sensing story, introducing integration execution as a new variable for investors to monitor.