STMicroelectronics (NYSE:STM) Issues Earnings Results, Beats Expectations By $0.05 EPS

Key Points

• STMicroelectronics beat earnings expectations, reporting Q2 EPS of $0.31 versus the $0.26 consensus estimate. The company also said Q2 revenue was $3.49 billion, coming in above the midpoint of guidance.
• AI data center revenue is now a bigger growth story, with ST raising its 2026 target to above $1 billion and seeing it well above $2 billion in 2027. Management expects this business, led by optical connectivity and silicon photonics, to help gross margin over time.
• Core markets and cash flow showed improvement, as automotive revenue rose 14% sequentially and industrial revenue climbed 20%. The company generated $75 million in free cash flow, while Q3 guidance calls for about $3.7 billion in revenue and roughly 37% gross margin.

STMicroelectronics (NYSE:STM - Get Free Report) announced its earnings results on Thursday. The semiconductor producer reported $0.31 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.26 by $0.05, Zacks reports. STMicroelectronics had a return on equity of 3.01% and a net margin of 1.19%.

Here are the key takeaways from STMicroelectronics' conference call:

• ST reported Q2 revenue of $3.49 billion, above the midpoint of guidance, with strong demand across automotive, industrial, and communications-related markets. Management said bookings were robust and book-to-bill was close to 2 overall, signaling improved visibility.
• AI data center exposure is becoming a larger growth driver: ST raised its 2026 data center revenue target to above $1 billion and now sees it well above $2 billion in 2027, driven mainly by optical connectivity and silicon photonics. Management also said this business should be accretive to gross margin over time.
• Automotive and industrial both accelerated, with automotive revenue up 14% sequentially and industrial up 20% sequentially. The company highlighted design wins in ADAS, powertrain, sensors, industrial automation, and power systems.
• Q3 guidance points to $3.7 billion in revenue at the midpoint and gross margin of about 37%, with management expecting further gross margin improvement in Q4. However, they warned that manufacturing reshaping costs and underloading charges will continue to weigh on margins.
• Cash generation improved, with positive free cash flow of $75 million in Q2, inventory days falling to 126, and the net financial position remaining solid at $2.01 billion. Management also said it expects 2026 net capex at the high end of the $2.0 billion-$2.2 billion range to support growth investments.

STMicroelectronics Stock Performance

STM stock traded down $11.04 during mid-day trading on Thursday, reaching $54.73. The company had a trading volume of 17,330,762 shares, compared to its average volume of 10,480,520. The company has a quick ratio of 2.34, a current ratio of 3.31 and a debt-to-equity ratio of 0.12. STMicroelectronics has a one year low of $21.11 and a one year high of $81.42. The stock's 50-day simple moving average is $70.54 and its two-hundred day simple moving average is $48.24. The stock has a market capitalization of $49.15 billion, a P/E ratio of 342.05 and a beta of 1.93.

Wall Street Analysts Forecast Growth

A number of brokerages have recently issued reports on STM. TD Cowen restated a "hold" rating on shares of STMicroelectronics in a research note on Monday, July 13th. Citigroup restated a "buy" rating on shares of STMicroelectronics in a research note on Sunday, April 26th. Craig Hallum reaffirmed a "buy" rating on shares of STMicroelectronics in a report on Thursday. Morgan Stanley reiterated an "overweight" rating on shares of STMicroelectronics in a research report on Tuesday, June 30th. Finally, Susquehanna upped their price target on STMicroelectronics from $60.00 to $75.00 and gave the company a "positive" rating in a research report on Tuesday. One analyst has rated the stock with a Strong Buy rating, eight have issued a Buy rating and four have given a Hold rating to the company. Based on data from MarketBeat, the company has an average rating of "Moderate Buy" and a consensus price target of $68.28.

Institutional Investors Weigh In On STMicroelectronics

Several large investors have recently made changes to their positions in the company. CIBC Private Wealth Group LLC increased its position in STMicroelectronics by 3,746.2% in the 4th quarter. CIBC Private Wealth Group LLC now owns 1,000 shares of the semiconductor producer's stock valued at $26,000 after acquiring an additional 974 shares during the period. Advisory Services Network LLC acquired a new position in shares of STMicroelectronics during the third quarter valued at $52,000. Brown Brothers Harriman & Co. raised its stake in shares of STMicroelectronics by 350.4% during the fourth quarter. Brown Brothers Harriman & Co. now owns 2,680 shares of the semiconductor producer's stock valued at $70,000 after purchasing an additional 2,085 shares in the last quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC acquired a new stake in STMicroelectronics in the fourth quarter worth about $80,000. Finally, Rakuten Securities Inc. grew its position in STMicroelectronics by 132.7% in the 2nd quarter. Rakuten Securities Inc. now owns 2,916 shares of the semiconductor producer's stock valued at $89,000 after buying an additional 1,663 shares in the last quarter. Institutional investors and hedge funds own 5.05% of the company's stock.

About STMicroelectronics

STMicroelectronics is a global semiconductor company headquartered in Geneva, Switzerland, formed through the 1987 merger of SGS Microelettronica and Thomson Semiconducteurs. The company designs, develops and manufactures a broad range of semiconductor products and solutions that serve multiple end markets worldwide. ST's offerings span from basic components to integrated systems, emphasizing energy-efficient and high-performance devices for modern electronics.

Product categories include microcontrollers (notably the widely used STM32 family), analog and mixed-signal ICs, power MOSFETs and power-management devices, MEMS and sensors, image sensors, and discrete semiconductors.

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