GET DAILY SIGNALSSTMicroelectronics (STM) Delivers Q3 2026 Results with +17.9% Revenue Growth
Key Takeaways
- STMicroelectronics reported third quarter 2026 net revenues of $3.76 billion, up 17.9% year over year and above the mid-point of its guidance range.
- Diluted earnings per share (EPS) came in at $0.31 on a U.S. GAAP basis, or $0.37 on a non-U.S. GAAP basis, slightly below analyst consensus estimates.
- Gross margin reached 37.3%, above the mid-point of the company's outlook, supported by better product mix and lower unused capacity charges.
- Fourth quarter 2026 guidance calls for net revenues of $4.15 billion and gross margin of about 39.0%, implying roughly 24.7% year-over-year growth.
- Management pointed to AI (artificial intelligence) datacenter and low-earth-orbit satellite communications as key growth drivers, with 2026 AI datacenter revenue expected near $1.3 billion.
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Why This Report Matters for Investors
STMicroelectronics' third quarter 2026 results serve as an important checkpoint for anyone following the semiconductor sector's recovery. After an extended inventory adjustment in industrial and automotive markets, the company is showing clearer signs of improving demand through stronger bookings and better visibility. The update also underscores ST's push into AI datacenters and satellite communications as longer-term growth areas that extend beyond its core automotive and industrial businesses. With guidance pointing to fourth-quarter acceleration and full-year 2026 revenue growth near 22.8%, the report helps gauge whether margin recovery and manufacturing changes are supporting more sustainable profitability.
Reviewing the Reported Numbers
For the third quarter ended September 26, 2026, STM posted net revenues of $3.76 billion, reflecting a 17.9% rise from the prior-year period and a modest beat versus expectations. U.S. GAAP gross margin came in at 37.3%, with operating income of $367 million and net income of $291 million, or $0.31 diluted EPS.
Excluding impairment, restructuring, and phase-out charges on a non-U.S. GAAP basis, operating income reached $429 million and net income $344 million, or $0.37 diluted EPS. Revenue topped consensus, though the non-GAAP EPS figure landed slightly below estimates. Free cash flow turned positive at $351 million, compared with $130 million a year earlier. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Fourth-quarter guidance points to net revenues of $4.15 billion at the midpoint, suggesting 10.5% sequential growth and about 24.7% year-over-year growth, with gross margin near 39.0%. That outlook supports full-year 2026 revenues of roughly $14.5 billion.
How the Market Responded
Expectations ahead of the release centered on an accelerating semiconductor recovery and expanding AI datacenter exposure. The revenue beat and above-midpoint gross margin reinforced views that demand is firming across key markets, while the modest non-GAAP EPS shortfall tied to restructuring costs linked to the manufacturing overhaul. Attention after the print focused on the fourth-quarter outlook and management's outlook for AI datacenter and satellite communications momentum. Overall, the combination of sequential growth, margin improvement, and stronger free cash flow painted a constructive picture of the recovery path.
Key Areas to Monitor Ahead
Fourth-quarter guidance signals continued revenue momentum, backed by solid bookings and a book-to-bill ratio above one across segments. Investors will track whether this trend holds into 2027, especially in AI datacenters where ST projects about $1.3 billion in 2026 revenue and has outlined ambitions above $2 billion for 2027.
On margins, the intermediate model targets a gross margin of 44% to 46% after the manufacturing reshaping program finishes. Temporary drags from unused capacity charges and restructuring costs are expected to ease in the second half of 2027, with more than 400 basis points of structural gross margin gains anticipated toward the end of 2027 or early 2028.
Additional items to follow include distribution channel inventory levels, which remain below target, and the pace of automotive and industrial demand recovery. Rising input costs and potential shifts in global trade tariffs also represent variables that could affect both revenue and margins in coming quarters.
Using AI Tools in My Research Process
When analyzing semiconductor names like STM, I often turn to Tickeron’s AI Screener to quickly filter for technical patterns, fundamentals, and sector trends. It helps surface comparable opportunities and confirm how individual stocks stack up without manual effort across thousands of names. This approach keeps the review process efficient while highlighting relevant data points for the broader industry context.
Disclaimer
The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.
Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
STM sees MACD Histogram crosses below signal line
STM saw its Moving Average Convergence Divergence Histogram (MACD) turn negative on October 12, 2026. This is a bearish signal that suggests the stock could decline going forward. Tickeron's A.I.dvisor looked at 52 instances where the indicator turned negative. In 46 of the 52 cases the stock moved lower in the days that followed. This puts the odds of a downward move at 88%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The Stochastic Oscillator entered the overbought zone. Expect a price pull-back in the foreseeable future.
STM moved below its 50-day moving average on October 09, 2026 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for STM crossed bearishly below the 50-day moving average on October 16, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In 13 of 16 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are 81%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where STM declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 74%.
The Aroon Indicator for STM entered a downward trend on September 23, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Bullish Trend Analysis
The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where STM's RSI Indicator exited the oversold zone, 25 of 32 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 78%.
The Momentum Indicator moved above the 0 level on October 28, 2026. You may want to consider a long position or call options on STM as a result. In 72 of 94 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 77%.
Following a +10.59% 3-day Advance, the price is estimated to grow further. Considering data from situations where STM advanced for three days, in 203 of 295 cases, the price rose further within the following month. The odds of a continued upward trend are 69%.
STM may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of 1 (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (2.357) is normal, around the industry mean (6.607). STM's P/E Ratio (-970.400) is considerably lower than the industry average of (23.000). Projected Growth (PEG Ratio) (0.195) is also within normal values, averaging (3.761). Dividend Yield (0.007) settles around the average of (0.011) among similar stocks. P/S Ratio (3.370) is also within normal values, averaging (45.794).
The Tickeron Seasonality Score of 16 (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is 44 (best 1 - 100 worst), indicating steady price growth. STM’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 86 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. STM’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 74, placing this stock worse than average.
The Tickeron SMR rating for this company is 91 (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is 100 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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