Onto Innovation (ONTO) is back in focus after second quarter results showed higher sales and net income compared with a year earlier, alongside fresh guidance that points to revenue growth and solid profitability.

The earnings beat, new third quarter guidance and the Rigaku stake have arrived alongside a strong run in Onto Innovation's stock. The 1 year total shareholder return of 190.16% and year to date share price return of 92.80% suggest momentum that has recently accelerated again after the latest 9.76% 1 day share price move.

If you are looking at Onto Innovation and want to see what else is moving in chip related areas, it is a good time to scan 57 AI infrastructure stocks

After a near doubling in 2026 and a sharp post earnings jump, Onto Innovation now sits at a very different share price than it did a year ago. Does the current valuation still leave enough upside to justify the risk?

Most Popular Narrative: 15.8% Undervalued

Onto Innovation's most followed narrative puts fair value at $380 per share, above the last close of $319.79, which frames the recent rally in a different light.

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 how this $380 fair value comes together? The narrative focuses on rapid earnings expansion, robust revenue growth and richer margins tied to AI advanced packaging.

Result: Fair Value of $380 (UNDERVALUED)

However, Onto Innovation still faces meaningful risk if advanced packaging or HBM spending slows, or if larger process control rivals win key tool slots.

Another View on Onto Innovation's Valuation

The narrative fair value for Onto Innovation sits at $380, yet the current P/E of 118.3x looks very rich next to the US semiconductor industry at 51.6x, peers at 49.5x and a fair ratio of 48.7x. That is a wide gap. Is the market already pricing in most of the AI story?

For investors who want to see how these earnings multiples stack up against detailed ratio work, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With Onto Innovation's valuation story looking both ambitious and debated, it makes sense to move quickly, review the underlying data, and decide where you stand. To weigh the upside against the concerns and see how others are framing the balance, check out the 2 key rewards and 3 important warning signs

Looking for more investment ideas beyond Onto Innovation?

If Onto Innovation has you rethinking your portfolio, this is the moment to widen the search and line up a few more high quality candidates.

• Target potential mispricings by screening for companies that combine quality fundamentals with attractive valuations through the 49 high quality undervalued stocks.
• Strengthen your income stream by focusing on companies with higher yields using the 8 dividend fortresses.
• Dial down portfolio risk by filtering for resilient businesses with steadier profiles through the 85 resilient stocks with low risk scores.

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.