The humble semiconductor chip may be ubiquitous in our daily lives, but the outlook for the broader field is bleak. In a sign of how bearish the market has been for the sector, the ProShares UltraShort Semiconductors ETF, a reverse exchange-traded fund that bets on the sector, is back nearly 60% this year. While demand for semiconductors has skyrocketed during the pandemic, chip giants such as Micron, Intel, Qualcomm and Nvidia have, in recent weeks, issued a chorus of warnings about slowing demand, causing fear that the besieged sector is still continuing to decline. But one stock stands out for its strong showing in the midst of a downtrend. Arizona-based ON Semiconductor is the best performer on the PHLX Semiconductor Index (SOX) this year. The stock is down just 0.6% this year, outperforming SOX, which has fallen about 24% in the same period. A brief summer rally saw the stock return 15.1% in the second quarter, beating the broad S&P 500 index, which has fallen 4.3% over the same period. The ‘record’ Q2 ON had a record second quarter, posting over $2 billion in revenue for the first time. It delivered earnings per share of $1.02 for the quarter, compared with $0.42 for the same period a year ago. The company also increased gross margin and free cash flow in the second quarter, while guiding higher EPS in the third quarter. The company turned on CNBC Pro’s display of “earnings season champions” — companies whose gross margins have increased by at least 5 percentage points since Q2 2021, and analysts have adjusted their estimates. calculate their EPS growth by at least 5 percentage points after earnings compared to the beginning of the earnings season. “Our leader in hyper-electrified vehicle acceleration, ADAS [advanced driver assistance systems], energy infrastructure and factory automation have enabled us to expand long-term supply agreements and increase demand visibility.” Hassane El-Khoury, President and CEO of ON Semiconductor, said in the company’s earnings announcement Read more The tech stock is up nearly 20% over the past year, but one expert says it’s just getting started. safe bets now – and analysts hail them as ‘Get out of these distorted markets’: Mohamed El-Erian on where to invest now Indeed, the company has long been focuses on providing chips for the automotive sector – especially the burgeoning electric vehicle industry. “ON has an automotive and industrial slant, currently two-thirds of sales, and they have more some structural foundation around electric vehicles and industrial automation,” Trent Masters, portfolio manager at Alphinity Investment Management, told CNBC’s “Street Signs Asia” v. on Monday. In addition to secular drivers, Masters notes that ON has b benefited from “significant” internal changes, such as manufacturing to scale, value-added facilities, and value realization its investment portfolio. He added that the company is building a “leading position” in silicon carbide semi-terms, which is crucial to expanding the range of EVs. “So while the semi-cycle can be violent but the long-term demand drivers are on. It’s been a wild ride but 14 times [price-to-earnings ratio] According to FactSet, for a business with a positive outlook is a “reasonable place.” $75.80 price target for the stock – giving the stock about 12% upside potential from current prices.