Analog chips maker onsemi (NASDAQ: ON) reported Q3 CY2025 results topping the market’s revenue expectations, but sales fell by 12% year on year to $1.55 billion. The company expects next quarter’s revenue to be around $1.53 billion, close to analysts’ estimates. Its non-GAAP profit of $0.63 per share was 6.6% above analysts’ consensus estimates.

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Company Overview

Spun out of Motorola in 1999 and built through a series of acquisitions, onsemi (NASDAQ: ON) is a global provider of analog chips specializing in autos, industrial applications, and power management in cloud data centers.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, onsemi’s sales grew at a mediocre 3.5% compounded annual growth rate over the last five years. This was below our standard for the semiconductor sector and is a rough starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. onsemi’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 13.9% annually.

This quarter, onsemi’s revenue fell by 12% year on year to $1.55 billion but beat Wall Street’s estimates by 2.2%. Despite the beat, the drop in sales could mean that the current downcycle is deepening. Company management is currently guiding for a 11.2% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection suggests its newer products and services will spur better top-line performance, it is still below the sector average.

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Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, onsemi’s DIO came in at 193, which is 33 days above its five-year average. These numbers suggest that despite the recent decrease, the company’s inventory levels are higher than what we’ve seen in the past.

Key Takeaways from onsemi’s Q3 Results

We enjoyed seeing onsemi beat analysts’ adjusted operating income expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 4.3% to $52.17 immediately after reporting.

Sure, onsemi had a solid quarter, but if we look at the bigger picture, is this stock a buy? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.