STMicroelectronics (STM) Earnings Date & Reports
A merger between Italian firm SGS Microelettronica and the nonmilitary business of Thomson Semiconducteurs in France formed STMicroelectronics in 1987... Show more
STM is expected to report earnings to rise 89.23% to 24 cents per share on July 23
STMicroelectronics (STM) Q1 2026 Earnings Recap: Revenue Beats Fuel Double-Digit Stock Rally
Key Takeaways
- STMicroelectronics reported Q1 2026 net revenues of $3.10 billion, up 23% year-over-year and beating consensus estimates of $3.04 billion.
- GAAP gross margin reached 33.8%, while non-GAAP gross margin (excluding certain adjustments like purchase price accounting effects) was 34.1%.
- Non-GAAP diluted earnings per share (EPS) came in at $0.13, below analyst consensus of around $0.18.
- Q2 2026 guidance projects net revenues of $3.45 billion at the midpoint, up 11.6% sequentially and 24.9% year-over-year.
- Datacenter revenues expected to exceed $500 million for full-year 2026, driven by AI infrastructure demand.
- Shares surged about 11% in the session following the earnings release, reflecting optimism over results and outlook.
Earnings Context and Why It Matters
STMicroelectronics, a leading semiconductor supplier in automotive, industrial, and AI applications, released Q1 2026 results amid ongoing industry inventory normalization and rising demand for AI-related chips. This quarter marked a pivotal recovery point following 2025's downturn, with strong year-over-year growth highlighting resilience in key end markets like communications equipment and personal electronics. Investors closely watched for signs of sustained demand momentum, margin recovery from reduced unused capacity charges (fees for idle manufacturing), and updates on AI-driven datacenter opportunities. These results provide critical insights into the broader semiconductor cycle and ST's positioning in high-growth areas like AI infrastructure and sensor technologies, influencing sector sentiment and valuation multiples.
STMicroelectronics posted Q1 2026 net revenues of $3.10 billion, a 23% increase from $2.52 billion in Q1 2025 but a 7% sequential decline from Q4 2025's $3.33 billion, primarily due to seasonality. Revenues exceeded the company's prior outlook midpoint by 170 basis points (1.7 percentage points) and analyst consensus.
GAAP gross margin improved to 33.8% from 33.4% year-over-year, aided by lower unused capacity charges of $69 million versus $123 million prior year, and better product mix, though it dipped 140 basis points sequentially. Non-GAAP gross margin was 34.1%. GAAP operating income rose to $70 million from nearly zero in Q1 2025, while non-GAAP reached $171 million. GAAP net income was $37 million ($0.04 diluted EPS), and non-GAAP net income was $122 million ($0.13 diluted EPS), trailing consensus EPS estimates.
Segment performance shone in Microcontrollers, Digital ICs, and RF (MDRF) at +32.1% year-over-year, and Analog, Power & Discrete, MEMS, and Sensors (APMS) at +16.4%. End markets grew across automotive (+15%), industrial (+26%), personal electronics (+21%), and communications equipment & computer peripherals (+41%). The recent NXP MEMS acquisition contributed $40 million but included purchase price accounting (PPA) effects impacting margins.
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Market Reaction and Investor Sentiment
STM shares jumped approximately 11% in the trading session following the Q1 earnings release, driven by the revenue beat, robust year-over-year growth, and upbeat Q2 guidance that exceeded expectations. Despite the EPS miss attributed to one-time acquisition costs and restructuring, investors focused on improving demand signals, strong book-to-bill ratios above 1.0 across markets, and AI tailwinds. Sentiment turned positive, with analysts raising price targets, viewing the results as confirmation of an industry inflection point.
Forward Outlook and Key Factors to Monitor
STMicroelectronics' Q2 2026 outlook signals accelerating growth, with net revenues projected at $3.45 billion midpoint (±3.5%), reflecting well-above-average seasonality and continued strength in engaged customer programs. GAAP gross margin is expected around 34.8% (including ~100 basis points unused capacity charges), with non-GAAP at 35.2%. Full-year net operating expenses are guided at $950-960 million, up mid- to high-single digits like-for-like.
Key catalysts include datacenter expansion, now forecasted above $500 million for 2026 and over $1 billion in 2027, fueled by partnerships like NVIDIA for 800V DC power conversion and AWS for AI infrastructure. The NXP MEMS acquisition bolsters sensors for automotive and industrial, though PPA amortization will linger. Book-to-bill ratios exceeding 1.0 indicate robust demand across automotive, industrial, and communications.
Investors should track inventory levels (currently 140 days), distribution channel normalization, and macroeconomic risks. Margin progression hinges on product mix, capacity utilization, and silicon photonics ramps. Upcoming milestones include China-based STM32 production and LEO satellite power tech. Broader industry dynamics, such as AI chip demand and auto electrification, will shape trajectory amid potential trade tensions.
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a broad range of semiconductor integrated circuits and discrete devices
Industry Semiconductors