STM: revenue up 26% for the quarter, but the share price falls on the Milan Stock Exchange (-17.7%)

STM closed the second quarter with revenue up 26 per cent to $3.487 billion, a gross margin up 130 basis points to 34.8 per cent, and a net profit of $222 million compared with a loss of $97 million in the same period of 2025. “Net revenue exceeded the mid-point of the company’s forecasts, thanks to higher revenue in the communication equipment, computer peripherals and automotive sectors,” explained CEO Jean Marc Chery, “whilst the gross margin was in line with expectations.” “Demand increased further during the quarter, with strong order bookings across all end markets,” explained Chery. “We have observed greater visibility and signs of supply constraints in several product categories. Distribution stock levels are now below our standard target.”

For the third quarter, the company is forecasting revenue of $3.7 billion, up 16.2 per cent on the same period in 2025, with a gross margin of 37 per cent, which still reflects a 70-basis-point charge for under-utilisation of capacity. Finally, in the last quarter of the year, the Italian-French semiconductor multinational expects a further acceleration in revenue, driven mainly by programmes already underway with customers in artificial intelligence data centres and low-Earth orbit satellite communications. The forecast for the latter part of 2026 is for revenue in excess of 4 billion dollars, which, as STM points out, corresponds to growth in the second half of the year compared with the first half that is ‘15 per cent higher than our normal seasonal pattern’.

“Thanks to continued strong demand from data centres for artificial intelligence, we are raising our revenue target for the data centre segment,” the CEO announced - “We now expect revenue to exceed $1 billion in 2026 and, assuming the current momentum continues and taking into account our current commitments, it could well exceed $2 billion in 2027.”

In the half-year ended 27 June, revenue stood at $6.582 billion, compared with $5.283 billion in the first half of 2025 (ended 28 June). As at 27 June, the net financial position stood at a positive $2.01 billion.

Despite the positive results, the share price got off to a poor start on the Milan Stock Exchange, before closing down 17.7% at €47.94. This was due to the weak outlook for the third quarter in the consumer electronics sector, where growth is expected to be ‘below normal seasonal levels’, which meant that STM was unable to escape the correction currently affecting the sector.