What Happened?
Shares of analog chips maker onsemi (NASDAQ: ON) fell 5.6% in the afternoon session after 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.
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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 2 days ago when the stock gained 4.8% on the news that a broad rally in the semiconductor sector pushed the Philadelphia Semiconductor Index to an all-time high. The move was part of a wider market rebound driven by tech stocks, as investor optimism lifted the chip industry. The Philadelphia Semiconductor Index, a key benchmark for chipmakers, gained as much as 2.2% during the session. The positive sentiment was widespread across the industry, with other companies like Micron and KLA also experiencing significant gains. This broad upswing in the sector appeared to be fueled by continued optimism around artificial intelligence (AI) technologies.
onsemi is down 15.9% since the beginning of the year, and at $51.93 per share, it is trading 30.5% 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 $2,003.
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