On October 29, STMicroelectronics reported Q3 results with operating profit beating market expectations. Excluding one-time charges, operating profit was $429 million**, nearly **double** year-over-year and above the **$400.5 million analysts surveyed by LSEG had forecast. The company expects Q4 revenue of $4.15 billion**, plus or minus **3.5%**, above Q3's **$3.76 billion and analysts' $4.10 billion estimate.
CEO Jean-Marc Chery said in the earnings statement that with demand continuing to far exceed supply, the company is expanding capacity along its strategic roadmap. STMicroelectronics' products include microcontrollers, sensors, and power semiconductors for automotive, factory, and smartphone applications. The company said growth in communications equipment, computer peripherals, and personal electronics drove the beat. Chery noted that beyond the cyclical recovery, AI data center demand and specific factors like low-Earth-orbit satellite communications further boosted growth.
Q3 gross margin rose to 37.3% from 33.2% a year earlier, helped by a higher share of high-margin chips and lower costs related to idle factory capacity. The company expects Q4 gross margin to rise further to about 39%. Jefferies analysts said in a preliminary report that they expect STMicroelectronics' growth to continue into 2027, with data center revenue nearly doubling from this year to next and gross margin room for more significant gains by end-2027.
ICgoodFind Summary: STMicroelectronics' Q3 operating profit nearly doubled and gross margin rose to 37.3%, with AI data centers and LEO satellite communications adding pull beyond the cyclical recovery. Q4 revenue guidance of $4.15 billion tops market expectations, and capacity expansion plus a richer high-margin mix are improving its profit structure.
