ST Microelectronics - New York Shares

Q2 results beat outlook midpoint; demand strong across key end markets - Net revenues $3.49B, above the midpoint of guidance; gross margin 34.8% (non‑U.S. GAAP 35.2%); non‑U.S. GAAP diluted EPS $0.31. - Inventory: flattish overall; distribution inventory below target (a positive cash/working-capital signal). - Free cash flow +$75M (vs - $152M a year ago). Book-to-bill ~2 overall; notably >2 in Communication Equipment & Computer Peripherals (driven by optical connectivity/silicon photonics).

Guidance: Q3 growth continues; margin expanding but still under cost headwinds - Q3 net revenues: $3.7B ± 350 bps (midpoint implies +6.2% sequentially, +16.2% YoY). - Q3 gross margin: ~37% ± 200 bps (includes ~70 bps unused capacity charges). - Management also highlighted Personal Electronics seasonality is weaker than normal in Q3 (expected below-normal sequential growth, tempering overall sequential momentum).

Data center optimism: major upward ambition for 2026–2027 (optics + MCU + power mix) - Raised “revenue ambition for data centers”: > $1B in 2026 and well above $2B in 2027. - Drivers: accelerating adoption of 800G and 1.6T pluggable optics, plus microcontroller control plane, BiCMOS electronic ICs, and ramping silicon photonics (300mm). - Capacity angle: they say not currently gated by photonics capacity (scalable in Crolles), but some tightness remains in parts of the supply chain (notably general-purpose microcontrollers).