STMicroelectronics N.V. STM is seeing stronger demand across industrial markets as applications such as factory automation, robotics and power infrastructure adopt physical AI. In the second quarter of 2026, Industrial revenues increased 34% year over year and 20% sequentially. Growth was driven by general-purpose microcontrollers, analog products, application-specific analog and power conversion products. Distribution inventory also declined further and moved below the company’s standard target.
The company is also expanding its product portfolio for physical AI applications. STM introduced industrial MEMS sensors with embedded AI for condition monitoring. A new compact 3D LiDAR module was also launched to provide AI-ready data for low-compute Edge AI systems. The products target applications including robotics, industrial automation and smart buildings.
STMicroelectronics is further building its position through the collaboration with NVIDIA Corporation NVDA. Under NVIDIA Halos, the company is supporting robotics and industrial applications with microcontrollers, sensors, motor control and security solutions. The collaboration covers chips, evaluation kits, software and reference designs.
The combination of improving industrial demand and new physical AI products could provide further support to the business. Stronger factory automation and robotics activity may increase demand for intelligent sensing, real-time control and power management. With distribution inventories already below the standard target, the company could also benefit from further demand recovery. These factors could help physical AI become a more meaningful part of STMicroelectronics’ industrial business.
How STMicroelectronics Stacks Up Against Industry Peers
STMicroelectronics competes with Broadcom Inc. AVGO and Marvell Technology, Inc. MRVL across optical connectivity, networking and semiconductor solutions for AI infrastructure. Both companies are expanding their exposure to higher-speed connectivity as AI systems require greater bandwidth between processors, servers and data centers.
Broadcom has a broad AI semiconductor portfolio spanning networking, optical components and custom AI accelerators. AI semiconductor revenues reached a record $10.8 billion in the second quarter, up 143% year over year, with networking accounting for almost 40% of AI revenues. The company also has a strong position in co-packaged optics, 1.6-terabit-per-second DSPs, continuous-wave and EML lasers. Broadcom is preparing a 200-terabit Ethernet switch and has been shipping its 100-terabit Tomahawk 6 switch.
Marvell has a more direct focus on high-speed optical interconnect and silicon photonics. Data center revenues reached a record $1.83 billion in the first quarter of fiscal 2027, up 27% year over year. Interconnect revenues are expected to grow more than 70% in fiscal 2027, supported by demand for 800G and 1.6T solutions. The company is also expanding into silicon photonics through its NVIDIA partnership and expects the scale-up optics business to ramp significantly.
Both Broadcom and Marvell have sizeable exposure to AI-driven connectivity demand. Broadcom combines optical connectivity with networking and custom AI silicon, while Marvell has a broader optical interconnect portfolio spanning DSPs, TIAs, drivers and silicon photonics. This positions both companies to benefit as AI infrastructure shifts toward higher-speed networking and optical connectivity.
STM Stock’s Price Performance & Valuation Trend
Shares of this multinational semiconductor and electronics company soared 91.4% year to date, significantly outperforming the Zacks Semiconductor - General industry, the broader Zacks Computer and Technology sector and the S&P 500 Index.
STM Price Performance (YTD)
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STM stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 21.93, as evidenced by the chart below.
STM Valuation (P/E F12M)
Image Source: Zacks Investment Research
EPS Trend of STMicroelectronics
STM’s earnings estimates for 2026 have moved upward in the past 60 days to $1.30, but the same for 2027 moved down to $2.77 per share. The revised estimates for 2026 and 2027 imply a significant year-over-year surge of 145.3% and 113.3%, respectively.
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STMicroelectronics currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).