STMicroelectronics fell about 6 percent today, its worst single day in a month, and has now dropped 20 percent from its July peak. We think this is mostly about a sharp drop in the broader chip sector today rather than any new problem at the company.
Our view
A sharp drop like this is no fun to sit through, but the company is still on track to grow its specialized power chip business significantly by next year. If you already own it, the best move is to stay the course and not let a volatile month shake your confidence.
German factory orders rose unexpectedly in June as businesses bought more parts and equipment to protect against potential shipping delays in the Middle East. This is a helpful sign for the company because German industrial firms are major buyers of the specialized chips used in factory robots and automation.
While high costs for raw materials are still a burden, the fact that demand is holding up suggests that the industrial slowdown that has weighed on recent results might be starting to ease.
UBS downgraded NXP Semiconductor, a close competitor, warning that car companies in China might be sitting on too many chips. If these carmakers have built up an inventory glut, they will stop placing new orders until they use up what they already have on hand.
This is a risk to watch because the company is heavily reliant on the automotive market. If the Chinese car market slows down or enters a period of clearing out old stock, it could delay the recovery in sales that management has been expecting.
The company provided an update on its ongoing plan to buy back its own shares, covering the period from July 20 to July 24. These buybacks are part of a program first announced in June 2024. When a company buys its own stock, it reduces the total number of shares available, which can make each remaining share more valuable over time. This is a routine update and shows the company is following through on its plan to return cash to its owners.
Goldman Sachs lowered its price target for the stock from $67.50 to $60.50. This change follows the company's recent earnings report and reflects a more cautious view on how quickly the chip market will bounce back. While the target is lower, it is still above the current stock price. The firm kept its neutral rating, suggesting they want to see more evidence of a steady recovery in car and factory chip demand before becoming more optimistic.
Quarterly results beat expectations as AI goals rise
The company reported second-quarter earnings of $0.31 per share on $3.49 billion in revenue, both slightly higher than what analysts expected. While the overall chip market has been in a slump, management noted that demand is starting to recover in key areas like electric cars and consumer electronics.
The most important detail was a raised sales target for chips that go into AI data centers. By focusing on the specialized power components needed for AI infrastructure, the company is finding a new path for growth even while its traditional industrial markets are still finding their footing. Management expects revenue to rise to about $3.7 billion next quarter.
Analysts adjusted their price targets following the company's late July earnings report. Most analysts remain positive, with 15 of 29 rating the stock a buy and the average target price suggesting 48% upside from today's price.
Average target$77.31+48%vs $52.27 today
TodayAvg price
Low $60High $100
Buy29 analysts
2Bearish
12Neutral
15Bullish
FirmRatingPrice TargetDate
Goldman Sachs
Neutral
$67.50→$60.50
7/27/2026
Barclays
Underweight
$65→$60
7/24/2026
Mizuho Securities
Outperform
$84→$80
7/24/2026
Craig-Hallum
Buy
$58→$70
7/23/2026
Susquehanna
Positive
$60→$75
7/21/2026
UBS
Neutral
$100
6/10/2026
Mizuho Securities
Outperform
$84
6/3/2026
Raymond James
—
$83
6/2/2026
Mizuho Securities
Outperform
$56→$68
5/19/2026
Robert W. Baird
Outperform
$45→$90
4/24/2026
Craig-Hallum
Buy
$58
4/23/2026
Mizuho Securities
Outperform
$48
4/16/2026
STMicroelectronics earnings
The company has a solid track record of clearing the bars set by analysts, beating profit expectations in five of the last eight quarters.
Earnings history
EstimateBeatMiss
STMicroelectronics past earnings results
Expected
Actual
Surprise
EPS
$0.26
$0.31
+19.2%
Revenue
$3.46B
$3.49B
+0.7%
Key highlights
Revenue growth accelerates: Net revenues increased 26.0% to $3.49 billion compared to the same period last year, a result that came in $110 million higher than the mid-point of what management had previously predicted.
Data center ambition raised: Management now expects sales from artificial intelligence data centers to exceed $1 billion in 2026 and reach well above $2 billion in 2027, highlighting the company's expanding role in AI infrastructure.
Mixed segment performance: The embedded processing division saw revenue jump 35.5% to $1.15 billion, while the power and discrete products segment remained in the red with a $99 million operating loss.
Operational efficiency improves: Gross margin, which is the percentage of sales left after production costs, rose to 34.8% from 33.5% a year ago as the company paid $66 million less in charges for keeping factories idle.
Optimistic third quarter outlook: The company expects third quarter revenue to reach $3.70 billion and gross margins to climb further to 37.0%, signaling a continued recovery in demand across its semiconductor markets.
Our take: This was a strong recovery quarter that suggests the worst of the semiconductor slump is over. The standout is the massive upgrade to data center targets, which gives the company a genuine AI growth story to complement its traditional automotive business. These results significantly strengthen the case for long term ownership.
STMicroelectronics’s next earnings date
Q3 2026
OCT
29
Expectation
EPS
$0.40
Revenue
$3.74B
SEP
22
Dividend payday
Own the stock before this date to get the next dividend payment.
Metrics we are tracking
Metric
Expectations
Status
Silicon Carbide Revenue
Reaching $2 billion in annual sales by FY2026
~$1.2B annual run rate in FY2025
Quarterly Revenue Growth
Staying above 15% YoY as the cycle recovers
26.0% YoY in Q2 2026
Gross Margin
Climbing back toward the 40% long-term target
34.8% in Q2 2026
Automotive Segment Growth
Sustaining double-digit growth as EVs proliferate
-24% in FY2025
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