What Happened?
Shares of analog chips maker onsemi (NASDAQ: ON) jumped 7.1% in the morning session after the company announced plans to collaborate with Innoscience to speed up the global rollout of its Gallium Nitride (GaN) power portfolio.
The partnership combined onsemi's system and packaging expertise with Innoscience's high-volume GaN manufacturing capabilities. The goal was to accelerate the adoption of cost-effective and energy-efficient power devices for the industrial, automotive, telecom, and data center markets. Under the agreement, onsemi expected to begin sampling the new products in the first half of 2026. The stock's rise also occurred amid broader strength in the semiconductor sector.
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What Is The Market Telling Us
onsemi’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 29 days ago when the stock dropped 4.2% on the news that investors reassessed stretched valuations following a period of strong gains, sparking a broad sell-off.
The tech-heavy Nasdaq fell as much as 1.6%, with the S&P 500 also declining. The pullback was exemplified by AI firm Palantir Technologies, which dropped over 7% despite reporting better-than-expected sales. This negative reaction to positive news suggests investors are concerned about extreme valuations and are engaging in "long liquidation"—selling positions to lock in profits after a significant rally.
Adding serious weight to this caution, leadership at both Goldman Sachs and Morgan Stanley highlighted the possibility of a correction in the equity markets over the next couple of years. Despite the euphoria driven by AI optimism and the promise of future rate cuts, these banks viewed this cooling-off period not as a disaster, but as a necessary and healthy feature of a long-term bull market.
onsemi is down 10% since the beginning of the year, and at $55.55 per share, it is trading 20.4% below its 52-week high of $69.81 from December 2024. Investors who bought $1,000 worth of onsemi’s shares 5 years ago would now be looking at an investment worth $1,909.
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