STMicroelectronics (NYSE:STM) Releases Quarterly Earnings Results, Misses Estimates By $0.03 EPS

Key Points

• STMicroelectronics missed on EPS but exceeded revenue expectations: Third-quarter EPS was $0.37 versus the $0.40 consensus, while revenue reached $3.76 billion, ahead of the $3.72 billion estimate. Profit nearly doubled year over year, with gross margin at 37.3%.
• AI data-center and satellite demand is driving an upbeat outlook: The company forecast fourth-quarter revenue of approximately $4.15 billion, with gross margin expected to reach 39%. Management anticipates AI data-center revenue of about $1.3 billion in 2026 and more than $2 billion in 2027.
• Execution risks and valuation remain concerns: Manufacturing restructuring, input-cost inflation, higher operating expenses, and capacity constraints could limit margin gains. After a strong rally, the stock trades at roughly 98 times earnings despite a consensus “Moderate Buy” rating.

STMicroelectronics (NYSE:STM - Get Free Report) announced its quarterly earnings results on Thursday. The semiconductor producer reported $0.37 EPS for the quarter, missing the consensus estimate of $0.40 by ($0.03), Zacks reports. STMicroelectronics had a net margin of 3.56% and a return on equity of 4.30%. The company had revenue of $3.76 billion during the quarter, compared to analyst estimates of $3.72 billion.

Here are the key takeaways from STMicroelectronics' conference call:

• Strong Q3 performance: Revenue reached $3.76 billion, above the midpoint of guidance, while non-GAAP EPS was $0.37 and free cash flow was $351 million. Growth was led by communication equipment and computer peripherals, industrial, and embedded processing.
• AI data center and satellite demand accelerated: Communication equipment and computer peripheral revenue rose 64% year over year, supported by AI data centers and low-earth-orbit satellite communications. ST expects about $1.3 billion of AI data center revenue in 2026 and well above $2 billion in 2027, with silicon photonics capacity planned to increase more than fourfold.
• Q4 outlook implies continued momentum: ST expects fourth-quarter revenue of approximately $4.15 billion, up 10.5% sequentially and 24.7% year over year, with gross margin around 39%. Full-year 2026 revenue is expected to reach roughly $14.5 billion, up 22.8%.
• Margin expansion remains a key opportunity: Management expects more than 400 basis points of structural gross-margin improvement from its manufacturing reshaping program once legacy fabs are closed, potentially toward late 2027 or early 2028. Mix, pricing, and manufacturing efficiencies are also expected to support improvement.
• Execution and cost risks remain: The manufacturing transition continues to weigh on profitability, particularly in analog, MEMS, and power/discrete businesses, while input-cost inflation and higher 2027 operating expenses could offset some benefits. Satellite growth may also be capacity constrained, requiring additional investment to capture demand.

STMicroelectronics Price Performance

STMicroelectronics stock traded up $1.36 on Thursday, reaching $49.88. The company's stock had a trading volume of 17,339,536 shares, compared to its average volume of 10,159,016. The business's fifty day moving average price is $50.38 and its 200 day moving average price is $49.64. The company has a debt-to-equity ratio of 0.16, a quick ratio of 2.08 and a current ratio of 2.78. The company has a market cap of $44.80 billion, a price-to-earnings ratio of 97.81 and a beta of 1.96. STMicroelectronics has a twelve month low of $21.11 and a twelve month high of $81.42.

Analyst Ratings Changes

A number of brokerages have issued reports on STM. Citigroup reissued a "buy" rating on shares of STMicroelectronics in a report on Wednesday, September 2nd. Craig Hallum reaffirmed a "buy" rating and issued a $70.00 target price on shares of STMicroelectronics in a report on Thursday, July 23rd. Barclays set a $60.00 target price on shares of STMicroelectronics in a research report on Friday, July 24th. TD Cowen cut their price target on shares of STMicroelectronics from $55.00 to $50.00 and set a "hold" rating for the company in a report on Monday, October 19th. Finally, Mizuho set a $70.00 price target on shares of STMicroelectronics in a research report on Thursday. Seven investment analysts have rated the stock with a Buy rating and five have issued a Hold rating to the company. According to MarketBeat.com, STMicroelectronics currently has a consensus rating of "Moderate Buy" and a consensus target price of $75.06.

Trending Headlines about STMicroelectronics

Here are the key news stories impacting STMicroelectronics this week:

• Positive Sentiment: Strong outlook and AI-driven demand: STMicroelectronics forecast fourth-quarter revenue of approximately $4.15 billion, above $4 billion, with gross margin expected to improve to 39.0%. Management also raised its data-center revenue expectations, citing demand from AI infrastructure and satellite operators. STMicro beats Q3 profit estimates, sees Q4 sales above $4 billion
• Positive Sentiment: Revenue and profitability improved: Third-quarter revenue reached $3.76 billion, ahead of the $3.72 billion analyst consensus. Gross margin was 37.3%, while operating income rose to $367 million on a reported basis and $429 million excluding certain items. The company said quarterly profit nearly doubled year over year. STMicroelectronics Reports Q3 2026 Financial Results
• Positive Sentiment: Unusually high call-option activity signaled increased bullish positioning, with investors purchasing 40,438 calls—about 140% above typical volume. This may have contributed to near-term trading momentum, although options activity is not a fundamental catalyst.
• Neutral Sentiment: Leadership restructuring: STMicroelectronics created chief technology officer and chief strategy officer roles. Rémi El-Ouazzane will lead technology and product priorities, while Marco Cassis will oversee corporate strategy and potential acquisitions. The changes could support long-term growth but provide limited immediate financial impact. STMicroelectronics Announces Updates to its Organization and Leadership Appointments
• Negative Sentiment: EPS missed expectations: Reported earnings were $0.37 per share versus the $0.40 consensus estimate. Additionally, after a roughly 104% one-year rally, STM trades at a high valuation of about 98 times earnings, leaving less room for execution disappointments. STMicroelectronics quarterly earnings report

STMicroelectronics Company Profile

STMicroelectronics N.V. NYSE: STM is a global semiconductor company that designs, develops, manufactures and markets a broad range of integrated circuits and other semiconductor products. Its offerings support applications in automotive, industrial, personal electronics, communications equipment and computer systems.

The company's product portfolio includes microcontrollers, analog and power semiconductors, sensors, microelectromechanical systems (MEMS), connectivity products and automotive chips.

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