STMicroelectronics N.V. STM reported exceptional second-quarter 2026 results, with adjusted earnings per share (EPS) and net revenues beating the Zacks Consensus Estimate and increasing year over year.
The quarterly results reflect higher Communications Equipment and Computer Peripherals (CECP) and Automotive sales, reflecting stronger demand across a broad set of applications. Also, AI data center and communications programs gained momentum during the quarter, further boosting the top line.
STM stock plunged 13.8% during today’s pre-market trading session, following the financial results.
STM’s Q2 Earnings & Revenues
STM’s second-quarter 2026 adjusted earnings of 31 cents per share were significantly up 416.7% year over year. The figure beat the Zacks Consensus Estimate of 26 cents by 19.2%.
Net revenues rose 26% to $3.49 billion year over year and surpassed the consensus mark of $3.45 billion by 1%.
STMicroelectronics N.V. Price, Consensus and EPS Surprise
STMicroelectronics N.V. price-consensus-eps-surprise-chart | STMicroelectronics N.V. Quote
STMicroelectronics’ Segment Results & Revenue Mix
Analog products, MEMS and Sensors revenues increased 26% to $1.43 billion. The segment generated operating income of $144 million and an operating margin of 10.1%, with growth led mainly by Imaging and MEMS.
Power and Discrete products revenues rose 3.7% to $464 million, but the segment posted an operating loss of $99 million and a negative 21.4% margin. Embedded Processing revenues jumped 35.5% to $1.15 billion, while operating income increased 97.8% to $226 million.
RF Optical Communications revenues climbed 32% to $445 million. Operating income increased 56.3% to $94 million, producing a segment operating margin of 21.2% compared with 17.9% a year earlier.
Automotive revenues increased 16% year over year and 14% sequentially. Industrial sales climbed 34% from the prior-year quarter and 20% from the first quarter, reflecting stronger demand across a broad set of applications.
Personal Electronics revenues advanced 20% year over year and 3% sequentially. CECP was the strongest end market, rising 50% from a year ago and 13% quarter over quarter as AI data-center and communications programs gained momentum. Original equipment manufacturers generated 70% of revenues, while distribution accounted for 30%.
STM’s Margins Advance
Adjusted gross margin expanded 170 basis points (bps) year over year and 110 bps sequentially to 35.2%. Reported gross margin was 34.8% (up 130 bps year over year), aided by lower unused-capacity charges and a better product mix.
Adjusted operating margin reached 7.7%, up from 2.1% in the year-ago quarter. Adjusted operating income rose a whopping 371.9% to $269 million, while adjusted net income surged 410.5% to $291 million. Adjusted net operating expenses were $960 million, representing 27.5% of revenues.
STM's Cash Flow Turns Positive
Net cash from operating activities totaled $502 million compared with $354 million a year earlier. Net capital expenditures were $409 million, down from $465 million in the prior-year period.
Free cash flow was positive $75 million against a negative $152 million a year ago. Inventory was $3.19 billion, while days sales of inventory improved to 126 days from 166 days. STM ended the quarter with liquidity of $6.03 billion and a net financial position of $2.01 billion.
STMicroelectronics' Q3 Outlook Signals Growth
For the third quarter of 2026, STMicroelectronics expects revenues of $3.70 billion at the midpoint. This implies growth of 6.2% sequentially and 16.2% year over year, with a range of +/- 350 bps.
Gross margin is projected at 37%, +/- 200 bps. The outlook assumes an effective euro-dollar exchange rate of about $1.14 and excludes potential effects from further changes to global trade tariffs.
STM Raises Its AI Data-Center Ambitions
Management expects fourth-quarter 2026 revenues above $4 billion, driven mainly by engaged customer programs in AI data centers and low-Earth-orbit satellite communications. That outlook points to second-half growth above the company’s normal 15% seasonality.
STM now expects data-center revenues above $1 billion in 2026 and, assuming current demand and customer engagements continue, well above $2 billion in 2027. The company also cited strong bookings across all end markets, improved visibility and signs of tight supply in several product categories.
STM Stock’s Zacks Rank & Stocks Poised to Beat Earnings
Currently, STMicroelectronics sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are some companies from the Zacks Computer and Technology sector, which according to our model, have the right combination of elements to post an earnings beat.
Dell Technologies Inc. DELL has an Earnings ESP of +3.89% and a Zacks Rank of 1 at present.
Dell’s earnings beat estimates in each of the last four quarters, the average surprise being 18.7%. The company’s earnings for the second quarter of fiscal 2027 are expected to grow 110.8% year over year.
HubSpot, Inc. HUBS currently has an Earnings ESP of +0.15% and a Zacks Rank of 1.
HubSpot’s earnings beat estimates in each of the last four quarters, the average surprise being 5%. The company’s earnings for the second quarter of 2026 are expected to increase 37.9% year over year.
Amphenol Corporation APH has an Earnings ESP of +1.12% and a Zacks Rank of 1.
Amphenol’s earnings beat estimates in each of the last four quarters, the average surprise being 14.1%. The company’s earnings for the second quarter of 2026 are expected to climb 46.9% year over year.
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STMicroelectronics N.V. (STM): Free Stock Analysis Report
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