Own ON Semiconductor For AI Power, Or Own Micron’s Contracts?

ON Semiconductor (ON) and Micron Technology (MU) are owned for the same reason. AI data centers need more silicon than the industry can make, and both sell into that shortage. The resemblance stops there. Micron has signed part of its peak pricing into multiyear contracts. ON Semiconductor is climbing out of a trough, still rationing parts between its AI customers and its car customers. Same shortage, opposite ends of a cycle.

Which One Has Already Sold What It Cannot Ship?

Both set first-time revenue guides above their latest reported results, not raises of earlier guidance. What sits behind the two guides is not the same kind of confidence.

In June 2026, Micron had signed 16 strategic customer agreements: take or pay contracts with binding commitments, typically running through the end of calendar 2030. They cover roughly 20% of its DRAM volume and a third of its NAND volume. Micron also projects $22 billion of cash deposits and related financial commitments under them. About $18 billion of that is cash deposits, held until the agreements are satisfied.

ON Semiconductor cannot ship all of its own demand. Management prioritized AI data center shipments over automotive and industrial in its second quarter of 2026, and expects supply to rebalance. Rationed demand and contracted demand are still different assets.

What Are You Actually Buying At ON Semiconductor?

A recovery that has not reached the trailing top line. Revenue over the last twelve months is $6.2 billion, down 3.1% year over year. The AI data center market is its fastest-growing one, and management expects that revenue to more than double in 2026. Total revenue still fell.

Input costs are rising, and management is pushing through a second round of price increases to offset them. You would be underwriting a power franchise early in its recovery: silicon carbide and energy storage systems, sold into AI data centers and into the cars and factories waiting behind them.

Do You Want The Cheap Peak Or The Expensive Trough?

Micron sits at the other extreme. Its operating margin is 65.7%, against a three-year average of 11.2%. Its largest agreements carry a price ceiling as well as a floor, capping what it can charge for existing products if memory prices keep climbing, though management says the midsize band’s floor still supports gross margin above past peaks.

On earnings before interest and tax, ON Semiconductor trades at 37.2 times and Micron at 18.2. Micron is ahead on every measure in the comparison: valuation, revenue growth, operating margin, net margin and leverage.

The fair objection is that these are different cycles. ON Semiconductor’s operating margin of 18.0% sits below its own three-year average of 23.4%, while Micron’s sits far above its own. You are comparing a company near the bottom of its cycle with one near the top. Part of Micron’s peak is under contract. ON Semiconductor’s trailing revenue is still falling. If you want both scored the same way, the five-factor scorecard ranks every stock on growth, profitability, stability, resilience and valuation.

Whichever Stock Wins The Comparison, Concentration Still Loses

A comparison sharpens the pick, but owning too much of either name is the same concentrated bet. Concentration tends to arrive by accident rather than by decision. What your largest position would do to your net worth is exactly what the Trefis Wealth team computes, with the same rules-based systematic discipline that runs our High Quality Portfolio. Request a free vulnerability audit of your biggest positions.