11:28 AM EST, 11/04/2025 (MT Newswires) -- ON Semiconductor (ON) may benefit from rising demand for its power conversion chips in data centers, unlocking "meaningful" revenue potential, Morgan Stanley said Tuesday in a report.

"That said, competition for allocation remains intense among 13 suppliers," the report said. "However, as management highlighted, ON stands out as one of only two suppliers offering a portfolio that spans the entire power tree, a differentiation that we agree is strategically advantageous."

Morgan Stanley estimates that sales to data centers will account for only 4% of ON's total revenue by year-end, or about $250 million.

"We come away from ON's earnings with incremental optimism on the data center opportunity and improved setup for an inventory replenishment cycle not currently in evidence," the report said.

On Monday, ON reported mixed Q3 results as adjusted earnings missed estimates by analysts, while revenue topped consensus.

Morgan Stanley raised its price target on ON shares to $55 from $52 and maintained its equal weight rating.

ON Semiconductor shares fell 3.9% in recent Tuesday trading.

Price: 48.50, Change: -1.96, Percent Change: -3.88