Institutional conviction behind ON Semiconductor (NASDAQ: ON) has reached a notable threshold, with 86 hedge funds holding positions in the company as of the second quarter of 2026.
Morgan Stanley has separately flagged the stock as one of the cleaner ways for investors to access the fast-expanding robotics sector without betting directly on robot manufacturers.
That institutional endorsement aligns closely with a thesis that technology analyst Jeff Brown has been developing since mid-2025, when he first introduced ON as his primary robotics investment idea.
Brown, who publishes the Near Future Report, argues that ON’s chips manage and deliver power to robotic motors with significantly greater efficiency than conventional semiconductor alternatives.
The practical upshot, in Brown’s telling, is that robots like Tesla’s Optimus can move more fluidly, generate less heat, and operate for longer stretches before requiring a recharge.
Beyond power delivery, ON also manufactures the sensor components that allow robots to perceive and interact with their physical environment, a capability Brown identifies as a potential second revenue stream from the same customer base.
Brown frames the entire investment case around what he describes as the manifested AI revolution, positioning ON as a low-profile supplier behind one of Elon Musk’s most ambitious hardware projects.
The stock ranked seventh on a newly compiled list of equities with the strongest upside potential heading into 2027, with analysts assigning it an average gain target of 36%.
That ranking was built partly from newsletter promotion data tracked by Stock Gumshoe, which recorded one teaser pitch referencing ON over the prior three months, during a review focused on promotions claiming outsized returns.
The broader Musk ecosystem that underpins the robotics narrative has itself been in flux, with Musk confirming on a recent earnings call that SpaceX and Tesla have each established independent director committees to evaluate a potential corporate combination.
Musk acknowledged he is recused from that process given his conflicting interests, and Gene Munster of Deepwater Asset Management has placed the probability of a deal closing within two years at 95%.
A combined entity, by Munster’s estimate, would carry a market value of roughly $3.5 trillion, a figure that would fundamentally alter how investors price Musk-linked hardware and infrastructure businesses.
SpaceX’s own financial momentum adds context to why analysts are paying closer attention to the supply chains surrounding Musk’s ventures, with third-quarter connectivity revenue climbing 69% to $5.2 billion.
SpaceX president Gwynne Shotwell reported that the Starlink service added 1.6 million subscribers during the quarter, and the company’s AI operations now account for nearly half of total revenue.
Capital commitments are scaling in parallel, with analyst Chris Versace of Tematica Research noting that SpaceX’s planned fourth-quarter expenditure of $35 billion to $40 billion signals a step change in infrastructure investment, supported by a $63 billion project backlog.
For ON Semiconductor, the question investors are increasingly asking is whether its technical advantages in power efficiency and sensor manufacturing are durable enough to constitute a genuine competitive moat as the robotics market matures.
