STMicroelectronics N.V.

Q2 2026 net revenues were $3.49 billion, above the midpoint of the company’s outlook range. Gross margin was 34.8% and non-U.S. GAAP gross margin was 35.2%; gross margin increased 130 basis points year over year and 100 basis points sequentially, helped by lower unused capacity charges and better product mix. Non-U.S. GAAP diluted EPS was $0.31, and non-U.S. GAAP operating income was $269 million with non-U.S. GAAP operating margin of 7.7%. Free cash flow was positive at $75 million. For Q3 2026, ST expects 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. Full-year 2026 non-U.S. GAAP net OpEx is expected to be slightly above $3.8 billion, and 2026 net CapEx is now expected at the high end of the $2.0 billion to $2.2 billion range.

Jean-Marc Chery struck an upbeat tone, saying demand accelerated further in Q2 with strong bookings, improved visibility, and signs of tight supply in several categories. He emphasized that automotive design wins continue to build, industrial is improving, and ST is positioning itself as a core enabler for the AI data center and physical AI markets through optical connectivity, sensors, microcontrollers, and power. He also highlighted new revenue opportunities in low Earth orbit satellites and quantum-related collaboration, framing these as extensions of ST’s technology portfolio and long-term growth strategy.

Lorenzo Grandi focused on margin progression, cost structure, and cash generation. He said gross margin rose to 34.8% in Q2, while non-U.S. GAAP gross margin was 35.2%, and noted about 60 basis points of gross margin drag from nonrecurring manufacturing reshaping costs; that headwind is expected to stay at a similar level for the rest of the year. He guided Q3 non-U.S. GAAP net OpEx to about $980 million and full-year 2026 non-U.S. GAAP net OpEx to slightly above $3.8 billion, with 2026 net CapEx at the high end of the $2.0 billion to $2.2 billion range. He also cited $502 million of operating cash flow, $409 million of net CapEx, $75 million of free cash flow, $2.01 billion of net financial position, and $6.03 billion of total liquidity.

Analysts pressed management on the jump in data-center revenue ambition, asking whether the upside was driven by optics or power and whether capacity was sufficient. Management said the increase is driven primarily by optical cable connectivity, especially 800G and 1.6T pluggable optics, but also by microcontrollers, BiCMOS electronic ICs, and silicon photonics; they said ST is not currently capacity-gated for this opportunity because of scalability in Crolles and broader manufacturing capacity. On margins, management explained that Q4 gross margin should improve sequentially, but not as much as revenue because underloading charges and manufacturing transition costs will still weigh on results. Analysts also asked about pricing, capacity tightness, and silicon carbide; management said pricing increases are broadly offsetting input-cost inflation, capacity tightness is most acute in legacy analog and microcontrollers, and silicon carbide revenues should grow double digits in 2026 versus 2025.