ST Microelectronics - New York Shares

Strong Q1 Performance and Revenue Growth: STMicroelectronics reported Q1 2026 net revenues of $3.1 billion, including $40 million from the NXP MEMS sensor business acquisition. Excluding this, revenues were above the midpoint of projections, driven by strong booking momentum across various segments, especially automotive (up 15% YOY) and communication equipment (up 41% YOY).

Improved Gross Margin Outlook: The company expects a gross margin of approximately 34.8% for Q2 2026, with non-U.S. GAAP gross margin at 35.2%. This is an improvement from 33.8% in Q1, attributed to a better product mix and anticipated lower unused capacity charges. However, manufacturing efficiency issues due to ongoing transformation plans could remain a challenge throughout 2026.

AI and Data Center Revenue Potential: ST expects to achieve data center revenues "nicely above $500 million" for 2026 and over $1 billion for 2027, driven by engaging with major customers like AWS for AI infrastructure solutions. Their potential upside in this segment is significant but may be limited by current capacity constraints, particularly concerning optical connectivity and photonics technologies, which are still ramping up.