STMicroelectronics profit misses estimates, shares fall 14%

By Nathan Vifflin

July 23 (Reuters) - STMicroelectronics ‌reported second-quarter ​core profit ​below market expectations and forecast third-quarter revenue slightly below analyst estimates on Thursday, sending its shares down 14%.

The results disappointed investors ‌betting on a faster recovery at the Franco-Italian chipmaker after a ⁠prolonged downturn in its automotive and industrial markets. Including Thursday's fall, the stock is still up ‌more than 110% this year.

STMicro ‌forecast third-quarter revenue of $3.70 billion, plus or minus 3.5%, versus analysts' average estimate of $3.72 billion, according to LSEG data.

Jefferies analysts said the third-quarter revenue ​guidance missed "perhaps because of a slower iPhone 18 ramp", although stronger gross margin guidance and the fourth-quarter outlook pointed to a better-than-expected 2027.

Second-quarter earnings before ⁠interest, taxes, depreciation and amortisation came in at $679 million, well below market expectations of $797.7 million.

The misses overshadowed ​a second-quarter revenue beat and management's optimistic outlook for AI-related data centres and low-Earth-orbit satellite communications.

The company said the profit hit ​came from impairment, restructuring and other phase-out ‌costs, as well as accounting effects from its acquisition of an NXP sensor business.

"During the quarter demand increased further, with ⁠strong bookings in all end markets. We saw improved visibility and signs of tight supply in several product categories," Chief Executive Jean-Marc Chery said in a statement.

"We anticipate a ⁠revenue growth acceleration in Q4, mainly driven by our engaged customer programs in AI datacenters ​and LEO satellite communication. We expect Q4 revenues to be above $4 billion," he added.

The company raised its data-centre revenue ambition, saying it now expects more than $1 billion in 2026 and ‌well above $2 billion in 2027, assuming current demand trends and customer engagements continue.

J.P. Morgan analysts said STMicro had "not done ‌enough to take the stock up significantly," adding that "the pre-announcement in June had created ⁠greater expectations" and that investors still ‌needed to see more ​evidence of gross-margin improvement to become substantially more bullish.

(Reporting by Nathan Vifflin in Gdansk, editing by Milla Nissi-Prussak, Elaine Hardcastle and ‌Matt Scuffham)

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