STMicroelectronics (NYSE:STM) Posts Quarterly Earnings Results, Misses Expectations By $0.03 EPS

STMicroelectronics (NYSE:STM) posted its quarterly earnings data on Thursday. The semiconductor producer reported $0.37 earnings per share for the quarter, missing the consensus estimate of $0.40 by ($0.03), Zacks reports. STMicroelectronics had a net margin of 3.80% and a return on equity of 4.72%. The company had revenue of $3.76 billion for the quarter, compared to analysts’ expectations 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 Trading Down 6.5%

Shares of STMicroelectronics stock traded down $3.24 during trading on Friday, reaching $46.75. The company’s stock had a trading volume of 13,864,719 shares, compared to its average volume of 10,502,738. The company has a quick ratio of 2.08, a current ratio of 2.78 and a debt-to-equity ratio of 0.16. STMicroelectronics has a 52-week low of $21.11 and a 52-week high of $81.42. The firm’s 50-day moving average is $50.31 and its two-hundred day moving average is $49.84. The company has a market cap of $41.99 billion, a price-to-earnings ratio of 83.48 and a beta of 1.96.

Key Headlines Impacting STMicroelectronics

Here are the key news stories impacting STMicroelectronics this week:

• Positive Sentiment: AI and satellite demand are improving growth prospects. Third-quarter revenue reached $3.76 billion, ahead of consensus, supported by AI data-center infrastructure, satellite customers and improving industrial demand. Management also raised its data-center revenue expectations and cited a roughly $20 billion backlog. Reuters report on STMicroelectronics results
• Positive Sentiment: Fourth-quarter guidance points to significant sequential growth. STMicroelectronics forecast fourth-quarter revenue of approximately $4.15 billion and a 39% gross margin at the midpoint, suggesting stronger demand and margin recovery. The company expects a broader recovery across industrial markets, while AI remains a key growth engine. STMicroelectronics Q3 financial results
• Positive Sentiment: Restructuring could support longer-term profitability. Management outlined a multiyear manufacturing reshaping program intended to improve the cost base and restore margins. New CTO and chief strategy officer appointments are designed to better coordinate product development, technology investment and corporate strategy. STMicroelectronics leadership announcement
• Neutral Sentiment: Options activity indicates increased speculative interest. Call-option volume was approximately 140% above typical levels, suggesting some traders are positioning for further upside, although this does not confirm a change in the company’s fundamentals.
• Negative Sentiment: Quarterly EPS fell short of expectations. Reported EPS of $0.37 missed the $0.40 consensus estimate, while profitability remains modest, with a reported net margin of 3.56%. Investors may be looking for execution on the promised margin recovery before assigning a higher valuation.
• Negative Sentiment: Valuation leaves limited room for disappointment. STM trades at a high earnings multiple after a substantial longer-term share-price advance. As a result, investors may be taking profits or reacting cautiously to restructuring risks, even though the revenue outlook is improving.

Wall Street Analyst Weigh In

STM has been the topic of a number of research analyst reports. Craig Hallum reissued a “buy” rating and issued a $70.00 target price on shares of STMicroelectronics in a research note on Thursday, July 23rd. Wall Street Zen lowered STMicroelectronics from a “buy” rating to a “hold” rating in a research note on Saturday, September 19th. Zacks Research cut STMicroelectronics from a “strong-buy” rating to a “hold” rating in a report on Monday, August 3rd. Susquehanna increased their price objective on STMicroelectronics from $60.00 to $75.00 and gave the company a “positive” rating in a research report on Tuesday, July 21st. Finally, The Goldman Sachs Group decreased their price objective on STMicroelectronics from $67.50 to $60.50 and set a “neutral” rating on the stock in a report on Monday, July 27th. Seven investment analysts have rated the stock with a Buy rating and five have assigned a Hold rating to the company. According to MarketBeat, the company has an average rating of “Moderate Buy” and an average target price of $75.06.

About STMicroelectronics

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.