STMicroelectronics N.V. (STM) Earnings

STMicroelectronics N.V.

STM · NYSE

Symbol: STM
Type: Stock
Sector: Technology
Industry: Semiconductors
Exchange: NYSE

At ST, we are 49,000 creators and makers of semiconductor technologies mastering the semiconductor supply chain with state-of-the-art manufacturing facilities. An integrated device manufacturer, we work with more than 200,000 customers and thousands of partners to design and build products, solutions, and ecosystems that address their challenges and opportunities, and the need to support a more sustainable world. Our technologies enable smarter mobility, more efficient power and energy management, and the wide-scale deployment of cloud-connected autonomous things. We are on track to be carbon neutral in all direct and indirect emissions (scopes 1 and 2), product transportation, business travel, and employee commuting emissions (our scope 3 focus), and to achieve our 100% renewable electricity sourcing goal by the end of 2027.

Key Issues

Bullish view

The all-Buy consensus and average target of $72.5 imply analysts see a recovery path after FY2025 revenue and profit declines. The stock’s rebound during the week also suggests investors may be looking beyond the latest trough.

Bearish view

FY2025 net income fell to $0.2 billion from $1.6 billion, while revenue declined to $11.8 billion from $13.3 billion. The supplied evidence provides no company-specific operating catalyst demonstrating that a recovery has begun.

Analyst Consensus

See all

Buy

12 analysts

$49

Current

—

Low

$70

Average

—

High

Average target implies +43.62% versus the current price.

Earnings History

BeatMissNo estimate

Dec 2026upcoming

Next quarter

Expected to report Jan 28, 2027 — estimated from last year’s reporting date.

Consensus is $0.53 EPS for Dec 2026 across 3 estimates, ranging $0.50 to $0.56.

STM Sep 2026

Reported Oct 29, 2026 · before the open

: 7.50%

: $0.40
: $0.37
: —
: —

Highlights

Earnings miss — Non-U.S. GAAP diluted EPS was $0.37, 7.5% below the $0.40 consensus; GAAP diluted EPS was $0.31, versus $0.26 a year earlier.
Revenue and demand — Q3 revenue was $3.76 billion, above the midpoint of company guidance. Overall book-to-bill was well above 2, with backlog above $20 billion, or about five quarters of revenue at the Q4 outlook midpoint.
AI datacenter growth — Management expects about $1.3 billion of datacenter revenue in 2026 and said 2027 revenue should be well above double that level; silicon photonics capacity is expected to increase more than fourfold year over year.
Q4 outlook — Revenue is forecast at $4.15 billion at the midpoint, up 10.5% sequentially and 24.7% year over year; gross margin is expected to be about 39%, including 40 basis points of unused-capacity charges.
End-market recovery — Industrial revenue rose 12% sequentially and 40% year over year; Communication Equipment and Computer Peripheral grew 14% sequentially and 64% year over year. Automotive was flat sequentially and up 5% year over year.
Gross-margin transition — Q3 gross margin was 37.3%, up 250 basis points sequentially and 410 basis points year over year. ST expects more than 400 basis points of structural improvement from manufacturing reshaping, mainly toward late 2027 or early 2028.
Cash generation — Free cash flow was $351 million, versus $130 million in Q3 2025; net financial position was $2.11 billion at quarter-end.

Analysis

ST’s Q3 showed a broadening recovery and fast-growing AI infrastructure sales, but adjusted EPS of $0.37 missed the $0.40 consensus by 7.5%. Revenue of $3.76 billion exceeded the midpoint of the company’s outlook, while gross margin reached 37.3%, 250 basis points above Q2 and 410 basis points above the year-ago quarter. GAAP net income rose to $291 million from $237 million a year earlier, and GAAP diluted EPS increased to $0.31 from $0.26. Free cash flow also improved to $351 million from $130 million.

The defining growth drivers were AI datacenters and a strong cyclical rebound in industrial: Communication Equipment and Computer Peripheral revenue increased 64% year over year, while Industrial grew 40%. Book-to-bill was well above 2 and backlog exceeded $20 billion, supporting a sharp Q4 step-up: ST guided to $4.15 billion of revenue and about 39% gross margin. For full-year 2026, the midpoint implies revenue of about $14.5 billion, up 22.8%, and non-U.S. GAAP gross margin of 36.6%. The central profitability question is how quickly higher volumes and better mix can offset transition costs and lead into the more than 400 basis points of structural margin improvement expected from the manufacturing reshaping program.

AI datacenters and satellites

The company-specific growth engines were the clearest upside in the quarter. Communication Equipment and Computer Peripheral revenue rose 14% sequentially and 64% year over year, driven mainly by AI datacenter products and low Earth orbit satellite communications. ST expects about $1.3 billion of datacenter revenue in 2026; management said 2027 should be well above double that, with silicon photonics becoming a much more significant contributor. Microcontroller datacenter revenue is expected to double year over year in 2027, while BiCMOS wins are expected to have a more visible effect in 2028. Silicon photonics capacity is planned to rise more than fourfold year over year. Satellite revenue is expected to be larger next year than this year, but management described the business as likely capacity-gated rather than demand-gated.

End-market recovery

Industrial — Revenue increased 12% sequentially and 40% year over year, led by general-purpose microcontrollers, analog and power-conversion products. Distribution inventory declined further and remained below ST’s standard target.
Automotive — Revenue was flat sequentially and up 5% year over year. ST cited demand for application-specific ICs and sensors across powertrain and ADAS, and design wins spanning electric, hybrid and combustion vehicles. Management expects automotive to grow in 2027, supported in part by European electromobility.
Personal Electronics — Revenue rose 12% sequentially but fell 4% year over year. Management attributed the sequential strength to customer demand rather than a specific pull-in.
Bookings and visibility — Book-to-bill was above 1 in every end market and well above 3 in Industrial and Communication Equipment and Computer Peripheral. Backlog exceeded $20 billion, equivalent to about five quarters of revenue at the Q4 guidance midpoint, though still below the 2022–23 peak.

Gross margin and reshaping

Gross margin was 37.3%, up 410 basis points year over year, mainly because of lower unused-capacity charges and improved mix. The quarter included about 60 basis points of unused-capacity charges and 40 basis points of nonrecurring manufacturing-reshaping costs. ST expects Q4 gross margin of about 39%, including 40 basis points of unused-capacity charges and about 30 basis points of reshaping-related nonrecurring costs. The longer-term plan is to close four legacy fabs and transfer production; more than 400 basis points of structural gross-margin improvement is expected as that work is completed, largely toward late 2027 or early 2028 and subject to customer qualifications. Better mix and pricing could help, while input-cost inflation remains a headwind. ST reaffirmed its intermediate gross-margin model of 44%–46%.

Guidance and operating costs

Q4 revenue guidance is $4.15 billion at the midpoint, with a range of plus or minus 3.5%; that would be up 10.5% sequentially and 24.7% year over year. For full-year 2026, the midpoint implies revenue of about $14.5 billion, 22.8% above 2025. Full-year gross margin is expected to be about 36.4%, or 36.6% on a non-U.S. GAAP basis, up 270 basis points from 2025. Q3 non-U.S. GAAP operating expenses were $972 million, below the company’s July indication; Q4 is expected at about $1.035 billion. Management expects 2027 operating expenses to increase, but said cost savings of $100 million–$120 million and lower startup costs should help keep expense growth below sales growth.

Cash and balance sheet

Cash flow — Net cash from operating activities was $1.02 billion, compared with $549 million in Q3 2025. Net capital expenditure was $643 million, versus $401 million a year earlier, leaving free cash flow of $351 million, up from $130 million.
Inventory — Quarter-end inventory was $3.25 billion, up from $3.19 billion in Q2 and $3.17 billion a year earlier. Inventory days were 126, unchanged sequentially and down from 135 a year earlier; distribution inventory remained below ST’s standard target.
Capital structure — Net financial position was $2.11 billion, with total liquidity of $5.31 billion and financial debt of $3.21 billion. ST paid $83 million in dividends and bought back $91 million of shares during the quarter. It also settled $750 million of convertible bonds in cash and about 4.2 million treasury shares.