STMicroelectronics Exceeds Revenue Expectations, But Profitability Disappoints in Q2
STMicroelectronics reported a revenue of $3.49 billion in the second quarter of 2026, up 26% year-over-year and above the average consensus of $3.39 billion compiled by LSEG. Gross margin improved to 34.8%, but the reported operating income was limited to $187 million, due in part to $58 million in restructuring and industrial redeployment charges and $24 million in effects related to the acquisition of NXP's MEMS sensor business. Concurrently, the group has raised its ambitions in AI data centers, with revenue now expected to exceed $1 billion in 2026 and well over $2 billion in 2027.
Revenue Exceeds Expectations with Improved Gross Margin
In the second quarter, STMicroelectronics recorded a net revenue of $3.49 billion, an increase of 26% year-over-year and 12.7% from the previous quarter. This growth exceeds the group's initial mid-point outlook by 110 basis points, driven particularly by higher revenues in communication equipment, computer peripherals, and automotive. The reported revenue also surpassed the average consensus of $3.39 billion compiled by LSEG. Gross margin reached 34.8% of revenue, up 130 basis points year-over-year, thanks to a reduction in charges related to unused capacities and a better product mix.
Restructuring Charges Impact Published Profitability
Operating income stood at $187 million, representing a margin of 5.4%, compared to an operating loss of $133 million a year earlier. This result includes $58 million in impairments, restructuring charges, and costs related to the redeployment of production tools, as well as $24 million in effects of purchase price allocation related to the acquisition of NXP's MEMS sensor activity. Excluding these items, non-U.S. GAAP operating income reached $269 million, corresponding to a margin of 7.7%. The net income attributable to the group was $222 million, or $0.24 per diluted share, while non-U.S. GAAP net income was $291 million, or $0.31 per share.
Ambitions Raised in AI Data Centers
STMicroelectronics has raised its revenue ambitions in AI data centers, driven by what management describes as solid and consistent demand. The group now aims for over $1 billion in revenue in this sector in 2026 and, assuming current momentum continues, well over $2 billion in 2027. For the third quarter, ST anticipates a revenue of $3.70 billion at the midpoint, up 6.2% over the quarter and 16.2% year-over-year, with a gross margin of 37%, incorporating about 70 basis points of charges related to unused capacities. The group also expects revenue to exceed $4 billion in the fourth quarter, primarily supported by programs in AI data centers and low-orbit satellite communications.
