ON Semiconductor has been downgraded to Hold by Benchmark after its recent share price rally, with analysts saying near-term growth drivers remain limited. The stock is trading above its $60 price target, reflecting fair value as demand across end markets begins to stabilize.

Benchmark expects continued pressure on margins in the near term and does not anticipate a clear shift in revenue growth until new technologies contribute meaningfully, which it expects from 2027. The company remains heavily tied to silicon carbide, particularly through electric vehicle demand in China, where growth is expected to slow as the domestic market becomes more saturated and export restrictions tighten.

While new areas such as AI data centers, the Treo platform and emerging VGaN technology are seen as longer-term opportunities, they are unlikely to lift revenue soon. Benchmark views VGaN as an important long-term opportunity but notes it could replace some of ON's higher-margin silicon carbide products over time, creating a near-term headwind. The brokerage said the company has a path to gross margins above 50% through structural improvements and higher factory utilization, though full margin recovery may not occur until 2028.