STMicroelectronics Q1 Earnings Miss Estimates, Revenues Rise Y/Y

STMicroelectronics STM posted first-quarter 2026 non-GAAP earnings of 13 cents per share, which increased 85.7% year over year but missed the Zacks Consensus Estimate by 31.6%.

STM’s earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters, while missing thrice, with an average negative surprise of 24.8%.

STM’s first-quarter 2026 revenues rose 23% from the year-ago period to $3.10 billion and beat the consensus mark by 1.3%.

The quarter benefited from stronger-than-expected demand in Communications Equipment and Computer Peripherals, where management highlighted AI data center programs as a key tailwind.

STM’s Quarter in Detail

Communications Equipment and Computer Peripherals was the clear standout, with revenues up 41% year over year and modestly higher sequentially, supported by power conversion wins for AI servers, a ramp in silicon photonics and expanding engagements with hyperscalers.

Industrial revenues increased 26% from the year-ago quarter, with the company pointing to improving demand, strong bookings and normalized inventory in distribution.

Automotive grew 15% year over year, while Personal Electronics advanced 21% on higher content even as seasonality weighed on sequential results.

Analog products, MEMS and Sensors revenues increased 23.2%, and Embedded Processing advanced 31.3%, both benefiting from stronger demand in imaging, MEMS and general-purpose microcontrollers.

Power and Discrete products revenues slipped 1.8% and remained a profitability drag, while RF and Optical Communications revenues climbed 33.9% on strength tied to AI-related connectivity.

The company also announced an expanded strategic collaboration with Amazon Web Services to support new cloud and AI compute infrastructure, alongside a broader 800-volt DC power conversion portfolio developed with NVIDIA.

STMicroelectronics Profitability

Non-GAAP gross margin was 34.1%, while the company noted that Purchase Price Allocation effects related to the NXP MEMS sensor business acquisition weighed on reported profitability.

Non-GAAP operating margin improved to 5.5%, reflecting better utilization and product mix.

STM Cash Flow Reflects Acquisition Payment and Inventory Build

As of March 28, 2026, the cash and short-term investment balance was $1.89 billion, down from $2.83 billion as of Dec. 31, 2025, with total financial debt of $2.57 billion.

Cash generation was pressured by the acquisition of NXP’s MEMS sensor business. Non-GAAP free cash flow was negative $723 million in the quarter, including an $895 million cash outflow related to the deal.

Net cash from operating activities totaled $534 million, and dividends paid to stockholders were $71 million.

STMicroelectronics Outlook Calls for Q2 Growth and Margin Lift

For the second quarter of 2026, the company’s mid-point outlook calls for net revenues of $3.45 billion, implying 11.6% sequential growth and 24.9% year-over-year expansion.

STM expects non-GAAP gross margin around 35.2%. Non-GAAP net operating expenses are projected between $950 million and $960 million.

Zacks Rank and Other Stocks to Consider

Currently, STM carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Zacks Computer and Technology sector are Arista Networks ADI, Advanced Energy AEIS and Applied Materials AMAT, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Arista Networks have gained 17.8% year to date. The Zacks Consensus Estimate for ANET’s 2026 earnings is pegged at $3.53 per share, up by a penny over the past 30 days, indicating an increase of 18.5% year over year.

Shares of Advanced Energy have rallied 78.8% year to date. The Zacks Consensus Estimate for AEIS’ 2026 earnings is pegged at $8.32 per share, down a penny over the past 60 days, indicating an increase of 29.8% year over year.

Applied Materials shares have surged 53.4% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $11.10 per share, up 7 cents over the past 30 days, indicating an increase of 17.8% year over year.

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This article originally published on Zacks Investment Research (zacks.com).

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