ON Semiconductor is emerging as a formidable contender in the AI inference space, with its data center-related revenue accelerating at a rapid clip. The company's stock has rallied as investors bet on its specialized power management and sensor chips becoming essential for running AI models after they are trained.
Unlike Nvidia, which dominates AI training with its GPUs, ON Semiconductor focuses on the inference stage—the process of using trained models to make predictions. This niche is expanding as more companies deploy AI in real-world applications, from autonomous vehicles to industrial automation, where energy efficiency and cost matter most.
The Motley Fool reports that ON Semiconductor's data center revenue grew significantly in the most recent quarter, though exact figures were not disclosed. The company's silicon carbide chips and intelligent power modules are increasingly used by cloud providers to reduce electricity consumption in AI servers.
If ON Semiconductor captures even a fraction of the inference market, analysts suggest its valuation could multiply. However, competition from established players like Intel and AMD poses a challenge, as does the risk of a broader slowdown in AI infrastructure spending.
Some skeptics argue that the inference market may not reach the scale of training, limiting the company's upside. The comparison to Nvidia may be premature, as ON Semiconductor lacks the software ecosystem that gives Nvidia its moat.