What Happened?
Shares of analog chips maker onsemi (NASDAQ: ON) jumped 4.8% in the afternoon session after UBS raised its price target on the stock to $55 from $50, while keeping a Neutral rating. The new price target represented a 10% increase. An analyst from the firm noted expectations for onsemi to report its third-quarter results near the middle of its guided range. This move occurred as the broader AI industry continued to expand, fueling growing demand for computing power within the semiconductor sector.
After the initial pop the shares cooled down to $52.56, up 3.6% from previous close.
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What Is The Market Telling Us
onsemi’s shares are extremely volatile and have had 32 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 5 days ago when the stock dropped 5.6% on the news that a weak forecast from peer Texas Instruments soured sentiment for the entire chip sector, adding to concerns about a sputtering industry recovery.
The major analog chip maker gave a lackluster revenue forecast that fell short of estimates. Texas Instruments' CEO stated that “the overall semiconductor market recovery is continuing, though at a slower pace.” This news triggered a broad sell-off, with the Philadelphia Semiconductor Index falling more than 2%. The negative sentiment compounded onsemi's own challenges, as the company had recently reported that its revenues fell 15.4% year-over-year in its last quarter.
onsemi is down 14.8% since the beginning of the year, and at $52.56 per share, it is trading 29.6% below its 52-week high of $74.70 from October 2024. Investors who bought $1,000 worth of onsemi’s shares 5 years ago would now be looking at an investment worth $2,088.
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