Results in line, solid guidance

The Franco-Italian group yesterday morning reported first-quarter revenue of 3.1 billion dollars and earnings per share (EPS) of 0.13 dollars. These figures are broadly in line with consensus estimates, which called for 3.04 billion dollars in revenue and 0.18 dollars in EPS.

For the second quarter, ST forecasts revenue of 3.45 billion dollars, exceeding the consensus of 3.2 billion dollars. This represents a sequential increase of approximately 12%, outperforming its American rival Texas Instruments, which anticipates a rise of around 8% over the same period.

Automotive and industrial segments recovering

According to Mizuho, growth is expected to be primarily driven by the automotive segment (projected to rise by more than 10%), supported by an approximately 5% increase in light vehicle production volumes. Industrial activities are expected to grow by about 25% quarter-on-quarter, fueled by the normalization of inventory levels at customer sites.

AI and aerospace catalysts

The outlook for AI data centers constitutes another key driver. Analysts estimate that the increase in content per gigawatt could allow the company to generate more than 4 billion dollars in additional addressable market annually.

Mizuho thus anticipates year-on-year growth of over 50% in AI-related data center revenue by 2026. Revenue is expected to exceed 500 million dollars, supported by 800-volt power solutions and silicon photonics (notably for Amazon Web Services starting in the second half of 2026).

An expansion into low Earth orbit (LEO) satellites, with two major customers, is expected to contribute approximately 3 billion dollars in cumulative revenue between 2026 and 2028.

Improving profitability

On the operational front, second-quarter gross margin is expected to rise by 110 basis points to 35.2%. After being penalized by capacity underutilization in the first quarter, factory utilization rates are expected to climb back to 80% in the second quarter (compared to 70% previously), with continued improvement anticipated in the second half of the year.

Stock market performance

Despite a slight decline of 0.4% this Friday, STMicroelectronics shares have posted an impressive 14.4% jump this week on the Paris Bourse, marking the best weekly performance on the CAC 40.