We recently published a list of 10 Best Semiconductor Stocks With The Highest Upside Potential. In this article, we are going to take a look at where ON Semiconductor Corporation (NASDAQ:ON) stands against other best semiconductor stocks with the highest upside potential.
The semiconductor index (SOX) has been on a tear over the last couple of years. The SOX surged by a whopping 66.95% in 2023, followed by a solid 23.79% in 2024. In comparison, the broader S&P 500 index returned 24.73% and 24.01% in the same period. However, the semiconductor index has fallen by 7.71% year-to-date.
In an interview with CNBC, Glen Kacher, the founder and Chief Investment Officer of Lights Street Capital, underscored his bullishness on chip stocks despite the underperformance in 2025. Kacher remains very bullish on generative AI, which needs the processing power of chips. Kacher said that there is nothing in the tech pipeline as innovative as Gen AI.
Gen AI creates customized answers for the user based on real underlying data. Gen AI has created a massive investment cycle of over $200 billion a year, Kacher said. The ‘Magnificent 7’ companies have been leading capex spenders on Gen AI, and according to Kacher, they will continue to spend big on Gen AI, which is a huge plus for semiconductor companies. The big tech companies are competing intensely over supremacy in Gen AI. Light Street Capital has been shifting a lot of its funds into what Kacher calls the ‘AI 5’.
Semiconductor Valuations are Reasonable Now
According to Kacher, since the summer of 2024, the SOX index has been flat, while the S&P 500 index has returned 15% during the same period. Kacher pointed out that the semiconductor fundamentals have continued to improve in that period. He said, the PE ratio for the SOX index is down by 20% since July 2024, and now stands at 24.5. Meanwhile, the PE ratio for the S&P 500 index is currently 22 and is up 9% in the same period, according to Kacher. Deloitte recently reported that the sales of the semiconductor industry grew 19% in 2024 to $627 billion and expects the sales to go up by over 11% in 2025. According to Deloitte, industry sales could easily surpass the $1 trillion mark by 2030.
According to Kacher investors are irrationally bearish on the semiconductor stocks. He said that the short exposure of hedge funds in the semiconductor stocks is at a five-year high. But given the steadily improving fundamentals and a reasonable valuation, semiconductor stocks could soon be market darlings again as many have a very high upside potential according to analysts.
Our Methodology
We have curated a list of ten semiconductor stocks that have the highest upside potential. For this, we used Finviz screener and set the industry as ‘semiconductor’. We also sorted by market cap and handpicked the stocks with the highest upside potential. Additionally, we have mentioned the hedge fund sentiment for each stock, as of Q4 2024.
Note: All data was recorded on March 19, 2025.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is ON Semiconductor Corporation (ON) The Best Semiconductor Stock With The Highest Upside Potential?
An engineer in front of a computer screen, reviewing a project-based outsourcing proposal.
ON Semiconductor Corporation (NASDAQ:ON) provides intelligent power and sensing solutions, focusing on the automotive and industrial markets. The company is driving advancements in electrification, AI, data centers, and sustainable energy. The company operates in three segments: Power Solutions Group (PSG), Analog and Mixed-Signal Group (AMG), and Intelligent Sensing Group (ISG). In 2025, the company completed the acquisition of the Silicon Carbide Junction Field-Effect Transistor (SiC JFET) technology business from Qorvo to enhance its power portfolio.
ON Semiconductor Corporation’s (NASDAQ:ON) customer base includes long-term relationships with distributors and direct customers, accounting for significant revenue from major OEMs and resellers. In 2024, sales to distributors made up 53% of revenue, with direct customer sales at 47%. Due to the long-term nature of the company’s contracts, there is visibility in earnings. During the Q4 2024 earnings call, the company highlighted its decision to exit volatile non-core businesses, representing around $350 to $400 million, and reiterated its commitment to high-value segments like SiC and medical. It is also making structural cost-cutting which is expected to take effect in Q2 2025.
Overall, ON ranks 8th on our list of best semiconductor stocks with the highest upside potential. While we acknowledge the growth potential of ON, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ON but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
