Forget Nvidia for a Moment: There's Another AI Stock Wall Street Thinks Could Explode!
It's no secret that everyone's buzzing about Nvidia (NVDA), and for good reason. The company's stock has seen impressive gains, with many analysts predicting even more growth. But what if I told you there's another player in the AI game that some experts believe could outperform even Nvidia?
Wall Street is overwhelmingly optimistic about Nvidia, with a vast majority of analysts recommending it as a 'buy' or 'strong buy.' The consensus points to a potential 44% increase in the stock's value over the next year. That's a significant return, no doubt.
However, one analyst is making a bold prediction about a different AI stock. Evercore ISI's Mark Lipacis has set a price target for ON Semiconductor (ON) that suggests a staggering 47% surge by 2026. This is where things get interesting!
On the Rise?
Onsemi, as it's commonly known, hasn't had the same stellar performance as Nvidia recently. In fact, the stock is down by a double-digit percentage this year. But Lipacis's outlook suggests a major turnaround.
Currently, the average price target for Onsemi reflects a potential upside of only 9%. Lipacis's $80 price target is the highest on Wall Street. However, less than half of the analysts surveyed by S&P Global rate Onsemi as a 'buy' or 'strong buy.' The rest either recommend holding the stock or, in one case, selling it.
Why Onsemi Could Soar in 2026
While Nvidia focuses on the GPUs used in AI servers, Onsemi specializes in intelligent power and sensing technology. Their products are used in various applications, including data centers, electric vehicles (EVs), industrial facilities, and energy infrastructure. The company sees a substantial growth opportunity, estimating its total addressable market at $44 billion, with an expected compound annual growth rate (CAGR) of around 18%.
Onsemi's new vertical gallium nitride (vGaN) power semiconductors could be a game-changer. These chips enable higher operating voltages and faster switching, potentially reducing energy loss by up to 50%. This makes them particularly attractive for AI data centers. The recent acquisition of Aura Semiconductor's Vcore power technologies is also expected to boost growth.
But here's where it gets controversial...
Is a 47% surge in Onsemi's stock by 2026 realistic? The company has some hurdles to overcome. Its Q3 revenue dropped by 12% year-over-year, and diluted earnings per share fell by 32%. While management anticipates a 10% to 12% CAGR by 2027, that's not as impressive as the 48% revenue increase analysts project for Nvidia next year.
And this is the part most people miss...
The fastest-growing areas of Onsemi's market are in EVs and EV charging stations. However, the adoption of EVs in the U.S. is slowing down, due to factors such as the rollback of national fuel-economy targets.
Onsemi's valuation appears reasonable, with shares trading at a forward price-to-earnings ratio of 18.5. But is this low enough to attract a flood of investors? Perhaps not.
Ultimately, the consensus view of a more modest gain for Onsemi in 2026 might be more realistic than the bold prediction of a 47% surge. But even Nvidia's projected 44% increase could be overly optimistic.
What do you think? Do you believe in Onsemi's potential, or are you more confident in Nvidia? Share your thoughts in the comments below!
