STMicroelectronics N.V.

Q2 2026 net revenues were $3.49 billion, above the midpoint of the outlook range. Gross margin was 34.8% and non-U.S. GAAP gross margin was 35.2%; non-U.S. GAAP diluted EPS was $0.31. Gross profit was $1.22 billion, up 31.1% year over year, and non-U.S. GAAP operating income was $269 million with non-U.S. GAAP operating margin of 7.7%. On a reported basis, net income was $222 million versus a net loss of $97 million a year ago, and diluted EPS was $0.24 versus negative $0.11. For Q3 2026, management guided to revenue of $3.7 billion plus/minus 350 basis points and gross margin of about 37% plus/minus 200 basis points, including about 70 basis points of unused capacity charges. For full-year 2026, non-U.S. GAAP net OpEx is expected to be slightly above $3.8 billion, and net CapEx is now expected at the high end of the $2 billion to $2.2 billion range. Management also said Q4 revenue is expected to be above $4 billion.

Jean-Marc Chery emphasized that demand accelerated in the quarter, with strong bookings, improved visibility and tighter supply in several categories. He highlighted automotive design wins, industrial momentum, and especially the ramp in AI data centers and optical connectivity, where ST raised its revenue ambition materially. His tone was confident but still framed by operational transition, noting that manufacturing reshaping and capacity ramps will continue to affect margins before the full model benefits show through.

Lorenzo Grandi focused on the financial bridge from Q2 to the rest of 2026. He said Q2 gross margin was 34.8%, up 130 basis points year over year, helped by lower unused capacity charges and better product mix, while Q2 non-U.S. GAAP OpEx was $960 million and Q2 free cash flow was positive at $75 million. He also said inventory was $3.19 billion with days sales of inventory at 126, net cash from operating activities was $502 million, net CapEx was $409 million, and net financial position remained solid at $2.01 billion. For the rest of the year, he guided Q3 non-U.S. GAAP net OpEx to about $980 million and full-year 2026 net CapEx to the high end of the $2 billion to $2.2 billion range.

Analysts pressed on why Q4 gross margin may not expand as much as some prior models implied at $4 billion of quarterly revenue. Management answered that the company is still in the middle of its manufacturing reshaping, with transfer and qualification costs, and that underloading charges will not fall as quickly in Q4 as they did from Q2 to Q3. Questions also focused on the data-center revenue step-up and whether it was demand- or capacity-driven; management said it is both, but demand is the primary driver and ST has room to scale through its manufacturing setup. On capacity overall, management said AI data-center demand is supportable, but microcontrollers, silicon carbide and analog remain areas of tighter supply or transition-related constraints.