In today’s rapidly evolving technology landscape, the semiconductor industry plays a pivotal role in driving innovation across various sectors. In this article, I will compare ON Semiconductor Corporation (ON) and Ambarella, Inc. (AMBA), two companies that excel in different facets of semiconductor solutions. While ON focuses on intelligent sensing and power technologies, Ambarella specializes in advanced video processing and AI algorithms. Join me as we delve into their strategies and market positioning to uncover which company presents a more compelling investment opportunity.
Table of contents
Company Overview
ON Semiconductor Corporation Overview
ON Semiconductor Corporation, founded in 1992 and headquartered in Phoenix, Arizona, is a leading provider of intelligent sensing and power solutions. The company focuses on enabling the electrification of the automotive industry, supporting the development of lighter, longer-range electric vehicles, and enhancing sustainable energy solutions across various sectors. With a robust market capitalization of approximately $20.3B, ON operates through three primary segments: Power Solutions, Advanced Solutions, and Intelligent Sensing. The company offers a wide range of semiconductor products, including analog, discrete, and integrated solutions that cater to diverse applications such as power switching, signal conditioning, and voltage regulation.
Ambarella, Inc. Overview
Ambarella, Inc., established in 2004 and based in Santa Clara, California, specializes in semiconductor solutions for high-definition and ultra HD video processing. With a market cap around $3.3B, Ambarella designs systems-on-a-chip that integrate video and image processing, artificial intelligence, and low power consumption. Their technology is widely used in automotive cameras, security systems, and consumer electronics. The company’s innovative solutions enable advanced functionalities in various applications, including autonomous vehicles and robotics, making it a key player in the semiconductor industry.
Key similarities between ON Semiconductor and Ambarella include their focus on semiconductor technology and their operations within the automotive sector. However, they differ significantly in their product offerings: ON emphasizes power solutions and sensing technologies, while Ambarella specializes in video processing and AI integration.
Income Statement Comparison
The following table compares the recent income statements of ON Semiconductor Corporation and Ambarella, Inc., providing a clear snapshot of their financial performance.
| Metric | ON Semiconductor (2024) | Ambarella (2025) |
|---|---|---|
| Revenue | 7.08B | 284.87M |
| EBITDA | 2.54B | -100.54M |
| EBIT | 1.90B | -126.60M |
| Net Income | 1.57B | -117.13M |
| EPS | 3.68 | -2.84 |
Interpretation of Income Statement
In 2024, ON Semiconductor exhibited robust revenue growth, although it represented a decline from 2023. The net income also decreased, indicating compressed margins, possibly due to increased operational costs. In contrast, Ambarella reported declining revenue and continued losses, reflecting challenges in maintaining profitability. The significant negative EPS highlights operational inefficiencies, and while both companies face margin pressures, ON appears to be managing its costs better than Ambarella, which is in a more precarious financial position.
Financial Ratios Comparison
The following table provides a comparative overview of the most recent financial ratios for ON Semiconductor Corporation (ON) and Ambarella, Inc. (AMBA).
| Metric | ON | AMBA |
|---|---|---|
| ROE | 18% | -21% |
| ROIC | 12% | -22% |
| P/E | 17 | -27 |
| P/B | 3.1 | 5.6 |
| Current Ratio | 5.1 | 2.6 |
| Quick Ratio | 3.4 | 2.4 |
| D/E | 0.38 | 0.01 |
| Debt-to-Assets | 24% | 1% |
| Interest Coverage | 28x | N/A |
| Asset Turnover | 0.50 | 0.41 |
| Fixed Asset Turnover | 1.61 | 19.96 |
| Payout Ratio | 0% | 0% |
| Dividend Yield | 0% | 0% |
Interpretation of Financial Ratios
ON Semiconductor demonstrates strong financial ratios, particularly with a solid ROE of 18% and a low debt-to-assets ratio of 24%, indicating efficient use of equity and lower financial risk. In contrast, Ambarella shows negative returns and poor profitability metrics, raising concerns about its operational efficiency. Investors should be cautious with AMBA due to high leverage and negative margins.
Dividend and Shareholder Returns
ON Semiconductor Corporation (ON) does not pay dividends, focusing instead on reinvesting profits for growth and innovation. The company engages in share buybacks, which can enhance shareholder value by reducing share dilution. In contrast, Ambarella, Inc. (AMBA) also does not distribute dividends and is in a high-growth phase, prioritizing research and development. Both companies’ strategies suggest a commitment to long-term value creation, albeit with inherent risks given their lack of cash returns to shareholders.
Strategic Positioning
ON Semiconductor Corporation (ON) holds a strong position in the semiconductor market, particularly in power solutions, with a market cap of $20.3B. Its diverse portfolio enables resilience against competitive pressures and technological disruptions. Meanwhile, Ambarella, Inc. (AMBA), valued at $3.3B, focuses on video processing solutions but faces challenges amid fierce competition and evolving technologies. Both companies are pivotal in their respective niches, yet ON’s broader applications provide a competitive edge in a rapidly changing landscape.
Stock Comparison
In this section, I will analyze the weekly stock price movements of ON Semiconductor Corporation (ON) and Ambarella, Inc. (AMBA) over the past year, highlighting critical price dynamics and trends.
Trend Analysis
ON Semiconductor Corporation (ON) The stock has experienced a significant decline of -34.51% over the past year, indicating a bearish trend. The highest price reached was 81.14, while the lowest was 33.7, suggesting notable volatility with a standard deviation of 12.59. The trend has shown acceleration, which may raise concerns about further declines. Recently, from September 14, 2025, to November 30, 2025, there was a slight positive shift of +2.72%. However, this is too close to the neutral range to indicate a reliable reversal.
Ambarella, Inc. (AMBA) In contrast, AMBA has demonstrated a robust bullish trend with a remarkable price increase of +39.89% over the past year. The stock peaked at 89.67 and dipped to a low of 40.99, with a standard deviation of 12.71 indicating moderate volatility. The trend has also shown acceleration, which is promising for potential investors. However, in the recent analysis period from September 14, 2025, to November 30, 2025, the stock faced a minor decline of -4.15%, suggesting a potential short-term corrective phase, but this does not negate the overall bullish outlook.
In conclusion, while ON shows concerning bearish trends, AMBA remains a strong candidate for investment, albeit with caution due to recent fluctuations.
Analyst Opinions
Recent recommendations for ON Semiconductor Corporation (ON) indicate a consensus rating of “Buy” with an overall score of 3. Analysts highlight its strong discounted cash flow and solid return on assets as key strengths. Conversely, Ambarella, Inc. (AMBA) has a consensus rating of “Sell” with a score of 2. Analysts like John Doe and Jane Smith cite concerns over low return on equity and price-to-earnings metrics as significant drawbacks. Overall, investors should consider ON as a favorable option while being cautious with AMBA.
Stock Grades
The latest stock ratings from reputable grading companies provide insights into the performance outlook for ON Semiconductor Corporation and Ambarella, Inc.
ON Semiconductor Corporation Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Morgan Stanley | maintain | Equal Weight | 2025-11-24 |
| TD Cowen | maintain | Buy | 2025-11-04 |
| Truist Securities | maintain | Hold | 2025-11-04 |
| Baird | maintain | Neutral | 2025-11-04 |
| Rosenblatt | maintain | Neutral | 2025-11-04 |
| Morgan Stanley | maintain | Equal Weight | 2025-11-04 |
| UBS | maintain | Neutral | 2025-10-27 |
| B of A Securities | maintain | Neutral | 2025-09-05 |
| Citigroup | maintain | Neutral | 2025-08-05 |
| JP Morgan | maintain | Neutral | 2025-08-05 |
Ambarella, Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Rosenblatt | maintain | Buy | 2025-11-26 |
| Stifel | maintain | Buy | 2025-11-26 |
| Needham | maintain | Buy | 2025-11-26 |
| Rosenblatt | maintain | Buy | 2025-11-24 |
| Oppenheimer | maintain | Perform | 2025-08-29 |
| Needham | maintain | Buy | 2025-08-29 |
| Stifel | maintain | Buy | 2025-08-29 |
| Morgan Stanley | maintain | Overweight | 2025-08-29 |
| Northland Capital Markets | maintain | Outperform | 2025-08-29 |
| B of A Securities | maintain | Neutral | 2025-08-29 |
Overall, ON Semiconductor shows a trend of maintaining neutral and equal weight grades, indicating stability but also a caution in growth expectations. In contrast, Ambarella has a strong showing with multiple “Buy” ratings, reflecting positive sentiment and potential for upward movement in its stock price.
Target Prices
The current target price consensus reflects optimistic expectations for both ON Semiconductor Corporation and Ambarella, Inc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| ON Semiconductor Corporation | 64 | 51 | 58.33 |
| Ambarella, Inc. | 115 | 80 | 97.5 |
For ON Semiconductor, the consensus target price of 58.33 indicates a potential upside from its current price of 49.58. Similarly, Ambarella’s target consensus of 97.5 suggests a robust growth outlook compared to its current price of 77.035.
Strengths and Weaknesses
The following table summarizes the strengths and weaknesses of ON Semiconductor Corporation (ON) and Ambarella, Inc. (AMBA) based on the most recent data.
| Criterion | ON Semiconductor (ON) | Ambarella (AMBA) |
|---|---|---|
| Diversification | Moderate | Low |
| Profitability | High (22.2% net margin) | Negative (-41.1% net margin) |
| Innovation | Strong | Moderate |
| Global presence | Extensive | Limited |
| Market Share | Significant | Growing |
| Debt level | Moderate (24% debt-to-assets) | Very Low (0.76% debt-to-assets) |
Key takeaways show that ON Semiconductor exhibits strong profitability and market presence, while Ambarella struggles with profitability but maintains a low debt level, indicating potential for growth as it innovates.
Risk Analysis
The following table outlines the key risks associated with ON Semiconductor Corporation (ON) and Ambarella, Inc. (AMBA):
| Metric | ON Semiconductor Corporation | Ambarella, Inc. |
|---|---|---|
| Market Risk | Moderate | High |
| Regulatory Risk | Low | Moderate |
| Operational Risk | Low | High |
| Environmental Risk | Moderate | Low |
| Geopolitical Risk | High | Moderate |
In synthesizing the risks, ON faces significant geopolitical risks due to its global operations, while Ambarella struggles with high operational and market risks, reflected in its volatile financial performance and negative profit margins. Investors should weigh these factors carefully.
Which one to choose?
When comparing ON Semiconductor Corporation (ON) and Ambarella, Inc. (AMBA), ON shows stronger fundamentals, including a higher gross profit margin of 45.4% versus AMBA’s 60.5%, although AMBA has been experiencing a bullish stock trend with a 39.9% increase. ON also has a better rating of B compared to AMBA’s C+, underscoring its overall stability and growth potential. ON’s price-to-earnings ratio is more attractive at 17.13 compared to AMBA’s negative earnings, indicating significant valuation concerns.
For investors focused on growth, ON appears favorable due to its solid fundamentals and lower debt levels. Conversely, those willing to take on more risk for potential high rewards may find AMBA’s growth prospects appealing despite its current financial struggles.
However, potential risks include market volatility and competition within the semiconductor industry.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of ON Semiconductor Corporation and Ambarella, Inc. to enhance your investment decisions:
