Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 3, 2026 · Beat 5 of last 7 quarters
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ON's accelerating AI data center revenue, now expected to more than double in 2026, underscores the critical role of power semiconductors in the AI infrastructure buildout. The expansion into 800-volt DC architectures and the AI halo effect on energy storage highlight how AI is driving demand across the entire power infrastructure, from grid to processor.
Q2 revenue of $1.6B exceeded guidance, driven by AI data center strength. Automotive revenue was $781M, down 2% sequentially but up 7% YoY; industrial was $423M, up 1% sequentially and 4% YoY; other was $400M, up 34% sequentially. PSG revenue grew 13% sequentially, AMG grew 1%, ISG declined 3%. Inventory declined 9 days to 192 days, with distribution inventory down to 10.1 weeks. The company returned $332M to shareholders via buybacks.
Management guided Q3 revenue to $1.65B-$1.75B, with non-GAAP gross margin of 40%-42% and EPS of $0.81-$0.93, implying EPS growth outpacing revenue by nearly 3x. They expect sequential gross margin expansion through the year, driven by utilization gains and pricing actions. AI data center revenue is now expected to more than double in 2026, with silicon carbide revenue in AI data centers up nearly 60% YoY. ESS revenue is expected to grow ~40% YoY, and China automotive silicon carbide revenue is expected to grow 60%-70% YoY. The company is implementing a second round of price increases to offset input costs, and expects the Synaptics acquisition to close in mid-2027.
“Our second quarter results demonstrate the operating leverage in our model, with revenue up 9% year-over-year and non-GAAP earnings per share growing approximately 4x faster than revenue.”
on Operating leverage
“As the only broad-based U.S. power semiconductor supplier with technologies spanning the full AI Power Tree, we are uniquely positioned to support this transition from the grid all the way to the processor.”
on AI data center positioning
“We are seeing multiple indicators of strengthening demand with China BEVs and automotive, for example, and energy infrastructure and medical and industrial already showing over market growth.”
on Demand recovery
How should we think about automotive demand and pricing?
Hassane said Q2 automotive was in line with expectations, with China strength and typical European seasonality. Pricing actions are offsetting input cost increases across all markets, including automotive.
Is the right rubric still 30 bps per point of utilization?
Thad confirmed 25-30 bps per point of utilization, and expects additional margin expansion in Q4 as utilization gains flow through.
Did prioritizing data center demand impact auto/industrial revenue?
Hassane said they made priority calls to shift shipments to AI data center, but expect manufacturing to catch up in Q3/Q4, with no lasting customer impact.