STMicroelectronics falls after Q3 sales outlook miss; raises data center revenue forecast

Shares of STMicroelectronics (STM) tumbled about 12% premarket on Thursday after the third quarter revenue outlook came in below estimates.

However, the company's second quarter results beat analysts' expectations. STMicroelectronics also raised the forecast for revenues from its data center business for the second time this year.

Outlook

The company — in which the French and Italian governments hold a stake — expects net revenues to be $3.70B, an increase of 6.2% sequentially, plus or minus 350 basis points. The figure is below the consensus revenue estimate of $3.80B.

The company expects a gross margin of 37%, plus or minus 200 basis points.

“We anticipate a revenue growth acceleration in Q4, mainly driven by our engaged customer programs in AI datacenters and LEO satellite communication. We expect Q4 revenues to be above $4 billion, this translates into a H2 vs H1 growth above our normal 15% seasonality,” said STMicroelectronics' President and CEO Jean-Marc Chery. The consensus revenue estimate for the fourth quarter is $4.05B.

Chery noted that the company now expects revenues from its data center to be above $1B in 2026 and, assuming the current dynamic continues and with the current engagements it has, the revenues to be above $2B in 2027.

"Driven by continued strong demand in AI datacenters, we are raising our revenue ambition for datacenters," said Chery. "This confirms ST’s strong position in the evolving AI datacenters."

Last month, STMicroelectronics nearly doubled its outlook for revenue from its data center business to about $1B in 2026, from its previous forecast of "nicely above $500 million" provided during its first quarter results in April.

Q2 Metrics

Net revenues for the second quarter ended June 27 surged 26% year-over-year to $3.49B, while non-U.S. GAAP EPS soared 416.7% year-over-year to $0.31. Both top and bottom line numbers beat estimates.

However, the company's earnings before interest, taxes, depreciation, and amortization were $679M, below market expectations of $797.7M, Reuters reported.

STMicro said the impact on profit came from impairment, restructuring, and other phase-out costs. It also cited ​accounting effects from its ​acquisition of an NXP (NXPI) ⁠sensor business.

"Q2 net revenues came above the mid-point of our business outlook range, driven by higher revenues in CECP and Automotive," said Chery. "During the quarter demand increased further, with strong bookings in all end markets. We saw improved visibility and signs of tight supply in several product categories. Inventory in distribution is now below our standard target."

Analog products, MEMS and Sensors (AM&S) segment revenue grew 26% year-over-year to about $1.43B, mainly due to Imaging and MEMS and, to a lesser extent, Analog.   

Related stocks premarket: Marvell Technology (MRVL) rose about 3%, while Lattice Semiconductor (LSCC) climbed about 1%. NXP Semiconductors (NXPI) and Analog Devices (ADI) each declined nearly 3%. Texas Instruments (TXN), which reported its second-quarter results post-market on Wednesday, fell about 6%.