Onto Innovation (ONTO) is back in focus after stronger customer uptake of its inspection tools, the launch of its Dragonfly G5 system with substantial orders, and a new Rigaku partnership including a planned equity stake.

Onto Innovation’s recent news has arrived alongside strong share price momentum, with a 7 day share price return of 24.9%, a 90 day share price return of 70.88%, and a 1 year total shareholder return of 239.8%. This suggests investors are re-pricing the stock as expectations around its Dragonfly G5 rollout and Rigaku partnership feed into growth and risk assumptions.

If Onto Innovation’s surge has you looking at the wider chip equipment space tied to AI demand, it may be worth scanning for other opportunities among 48 AI infrastructure stocks

With Onto Innovation stock already up sharply and trading close to analyst targets while some models flag it as overvalued, the key question now is whether there is still a buying opportunity or if markets are already pricing in future growth.

Most Popular Narrative: 11.6% Undervalued

According to the most widely followed narrative on Onto Innovation, a fair value of $380 sits above the recent $335.96 close. This puts the current rally in a different light for investors weighing upside against expectations already in the price.

The AI semiconductor race is no longer only about who designs the fastest chips. Increasingly, success depends on who can package, stack, inspect, and manufacture those chips reliably at scale.

Want to see why this narrative lands on a $380 fair value? It leans heavily on aggressive earnings compounding, richer future margins, and a premium profit multiple usually reserved for sector leaders. Curious which specific bottlenecks in advanced packaging and HBM are expected to turn that thesis into numbers? The full narrative lays out the exact revenue mix and profitability path that underpin that price.

Result: Fair Value of $380 (UNDERVALUED)

However, Onto Innovation’s story can change quickly if advanced packaging capex slows, or if a larger rival’s technology gains share and weakens its pricing power.

Another View: Multiples Point To An Expensive Onto Innovation Stock

The user narrative argues Onto Innovation stock is about 11.6% undervalued around a $380 fair value, but the preferred price to sales lens tells a tougher story. At 16.2x P/S versus a US semiconductor industry average of 8.8x and a fair ratio of 11x, the stock sits on a rich multiple that could matter if sentiment cools.

That gap between 16.2x today and an 11x fair ratio means even solid execution might coexist with valuation risk, particularly if peers with lower P/S ratios start to look more appealing on a relative basis. The question for investors is whether Onto Innovation’s advanced packaging position really justifies paying so far above both industry and peer averages, or if expectations have simply raced ahead of the story.

Next Steps

If the mixed sentiment around Onto Innovation has you undecided, take a close look at the numbers and decide where you stand. To weigh both sides clearly, start with the 1 key reward and 2 important warning signs.

Looking for more investment ideas beyond Onto Innovation?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.