STMicroelectronics Q2 Earnings Call Highlights

Second-quarter results topped expectations with revenue of $3.49 billion and broad demand acceleration across end markets, led by AI data centers, optical connectivity, industrial, automotive and communications. Gross margin came in at 34.8% and non-U.S. GAAP diluted EPS was $0.31. Data center outlook was raised sharply , as STMicroelectronics now expects revenue above $1 billion in 2026 and potentially well above $2 billion in 2027, driven by strong traction in 800G and 1.6T pluggable optics and silicon photonics. Management said 2026 is already covered by backlog and capacity is not currently the constraint. Guidance and profitability improved , with third-quarter revenue forecast at $3.7 billion and gross margin around 37%, while fourth-quarter revenue is expected to exceed $4 billion. The company also generated positive free cash flow, reduced inventory days, and raised 2026 capital spending plans to support growth areas like cloud optical interconnect.

STMicroelectronics NYSE: STM reported second-quarter 2026 revenue above the midpoint of its outlook and said demand accelerated across all end markets, with management pointing to particularly strong momentum in AI data centers, optical connectivity and industrial applications. President and Chief Executive Officer Jean-Marc Chery said second-quarter net revenue was $3.49 billion, supported by higher sales in communication equipment, computers and peripherals, and automotive. Gross margin was 34.8%, while non-U.S. GAAP gross margin was 35.2%, both in line with the midpoint of the company’s outlook. Non-U.S. GAAP diluted earnings per share were $0.31.

Chery said bookings were strong during the quarter, with an overall book-to-bill ratio close to 2. He said the ratio was “well above one” across all end markets and “significantly above 2” in communication equipment, computers and peripherals, driven mostly by optical connectivity, including silicon photonics. He also cited improved visibility and signs of tight supply in several product categories.

Revenue Growth Across End Markets Automotive revenue rose 14% sequentially and 16% year over year, ahead of company expectations. Chery attributed the growth to ST’s position in application-specific ICs and sensors for conventional applications, electric powertrain and advanced driver-assistance systems. He said the company secured design wins in hybrid electric and conventional vehicles, including onboard chargers, powertrain and active suspension applications.

Industrial revenue increased 20% sequentially and 34% year over year. Chery said distributor inventory declined further and is now below ST’s standard target. Growth was driven by general-purpose microcontrollers, analog products, application-specific analog products and power conversion products. He also highlighted product introductions for industrial condition monitoring and edge AI, including industrial MEMS sensors with embedded AI and a compact 3D LiDAR module.

Personal electronics revenue increased 3% sequentially and 20% year over year. Chery said the growth reflected increased content per device in engaged customer programs and better-than-normal seasonality. During the quarter, ST introduced a secure chip combining post-quantum cryptography acceleration with NFC, secure element and eSIM functions, as well as a new generation of ultra-low-power global shutter image sensors.

Communication equipment, computers and peripherals revenue increased 13% sequentially and 50% year over year, coming in above expectations. Chery said growth was driven by engaged ...