STMicroelectronics (STM) AI Stock Analysis

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STMicroelectronics

(NYSE:STM)

Rating:76Outperform

Price Target:

$36.00

▲(7.75%Upside)

STMicroelectronics' overall stock score is primarily driven by its strong technical momentum and solid financial performance, despite recent revenue and cash flow challenges. The valuation is relatively high, and the latest earnings call highlighted significant financial pressures. However, ongoing investments in growth areas and sustainability provide a positive outlook.

Positive Factors

Business Expansion

ST is the sole source supplier to SpaceX, with another customer ramping, providing data center opportunities.

Financial Performance

Gross margin recovery is expected to accelerate, benefiting from improved utilization rates and yield recovery at fabs.

Market Opportunities

JV with Sanan Optoelectronics is ramping with SiC content in next-gen China EVs, spurring a rebound in SiC revenue.

Negative Factors

Geopolitical Concerns

Tariffs are clouding the demand environment, adding uncertainty to business prospects.

Market Risks

Risks include currency fluctuations, weakening consumer demand, and still-high channel inventories.

Operational Challenges

Underloadings and lower capacity reservation fees continue to pressure GM%.

STMicroelectronics (STM) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$29.68B

Dividend Yield0.96%

Average Volume (3M)6.70M

Price to Earnings (P/E)28.5

Beta (1Y)1.64

Revenue Growth-25.47%

EPS Growth-70.07%

CountryUS

Employees49,602

SectorTechnology

Sector Strength94

IndustrySemiconductors

Share Statistics

EPS (TTM)-0.11

Shares Outstanding902,771,060

10 Day Avg. Volume7,373,172

30 Day Avg. Volume6,700,871

Financial Highlights & Ratios

PEG Ratio-0.91

Price to Book (P/B)1.66

Price to Sales (P/S)0.00

P/FCF Ratio120.03

Enterprise Value/Market Cap0.99

Enterprise Value/Revenue0.53

Enterprise Value/Gross Profit6.34

Enterprise Value/Ebitda1.91

Forecast

1Y Price Target

$37.75

Price Target Upside12.99% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering8

STMicroelectronics Business Overview & Revenue Model

Company DescriptionSTMicroelectronics (STM) is a leading global semiconductor company that designs, develops, manufactures, and markets a wide range of products for microelectronics applications. The company operates in various sectors, including automotive, industrial, personal electronics, and communications equipment. Its core products include integrated circuits, discrete and power devices, MEMS and sensors, and microcontrollers, serving a diverse array of industries and technological applications.

How the Company Makes MoneySTMicroelectronics generates revenue primarily through the sale of its semiconductor products, which are used in a wide variety of electronic applications. The company's revenue streams are largely categorized by end-market sectors such as automotive, industrial, personal electronics, and communications equipment. STMicroelectronics collaborates with major companies across different industries to integrate its technologies into their products, which drives sales and enhances its market reach. Key factors contributing to its earnings include innovation in semiconductor technology, strategic partnerships, and addressing the growing demand for electronics in automotive and industrial applications. The company also invests in research and development to maintain its competitive edge and to meet the evolving needs of its diverse customer base.

STMicroelectronics Key Performance Indicators (KPIs)

Any

Revenue by Product

Revenue by Product
Examines revenue generated from individual products, shedding light on best-sellers, market trends, and product lifecycle stages.

Chart InsightsSTMicroelectronics faces a challenging period with declining revenues across key product segments, notably in Analog Power and Microcontrollers. Despite these setbacks, the company is optimistic about future growth, supported by a strong book-to-bill ratio and innovations in automotive microcontrollers. However, high inventory levels and significant drops in operating margins and net income highlight ongoing financial struggles. The company is investing heavily in manufacturing capabilities and sustainability, aiming for carbon neutrality by 2027, which could bolster long-term resilience.

Data provided by:

Main Street Data

STMicroelectronics Earnings Call Summary

Earnings Call Date:Jul 24, 2025

(Q1-2025)

% Change Since: 53.82%|

Next Earnings Date:Oct 23, 2025

Earnings Call Sentiment Negative

The earnings call highlighted STMicroelectronics' innovative strides in microcontrollers and personal electronics, as well as positive developments in sustainability. However, these positives are overshadowed by significant revenue declines, challenges in the automotive sector, high inventory levels, and substantial drops in operating margins and net income.

Q1-2025 Updates

Positive Updates

Positive Book-to-Bill Ratios

The company reported a book-to-bill ratio above one for both the automotive and industrial sectors, indicating potential growth in these areas.

Innovations in Automotive Microcontrollers

Notable progress in automotive microcontrollers with the introduction of new products set to launch in 2025 and 2026, which are expected to drive revenue growth.

Strong Performance in Personal Electronics

The personal electronics segment performed slightly better than expected, with innovative advancements in MEMS, optical sensing, and analog technology.

Leadership in General-Purpose Microcontrollers

The STM32 microcontrollers maintained a number one ranking in the general-purpose microcontroller market, with a market share that has consistently grown.

Sustainability Efforts

STMicroelectronics issued its first annual integrated report and is on track to achieve carbon neutrality by 2027.

Negative Updates

Significant Revenue Decline

On a year-over-year basis, Q1 net revenues decreased 27.3% to $2.52 billion, and the gross margin decreased to 33.4% from 41.7%.

Automotive Revenue Challenges

The automotive segment saw lower revenues across all geographies, with a decline of about 39% year-over-year, and full-year revenues expected to decline.

High Inventory Levels

Inventory at the end of Q1 was $3.01 billion, with days of sales of inventory at 167 days, indicating slow inventory turnover.

Operating Margin Decline

Operating margin decreased to 0.1% from 15.9% year-over-year, reflecting significant challenges in maintaining profitability.

Net Income Drop

Net income decreased 89.1% to $50 million, a substantial drop indicating financial struggles.

Economic Uncertainty and Tariff Concerns

Uncertainty around global trade tariffs and the economic environment is impacting the company's outlook and planning.

Company Guidance

During the STMicroelectronics Q1 2025 earnings call, the company reported a 27.3% year-over-year decrease in net revenues to $2.52 billion, with a gross margin reduction from 41.7% to 33.4%. Operating margin dropped significantly from 15.9% to 0.1%, and net income fell 89.1% to $50 million. The automotive segment experienced lower revenues, but the company maintained a book-to-bill ratio above one, indicating future growth potential. STMicroelectronics also highlighted the progress in its automotive microcontroller portfolio, with strong design momentum in regions like China, EMEA, and the Americas. The company continues to focus on reshaping its manufacturing footprint, targeting $2 billion to $2.3 billion in CapEx for 2025 to enhance its 300-millimeter silicon and 200-millimeter silicon carbide capabilities. Despite market uncertainties, STMicroelectronics remains committed to its medium-term growth drivers, including MEMS, optical sensing solutions, and microcontrollers, while aiming for carbon neutrality by 2027.

STMicroelectronics Financial Statement Overview

Summary

STMicroelectronics shows strong profitability and balance sheet stability with robust profit margins and low leverage. However, recent declines in revenue and free cash flow pose challenges, necessitating attention to growth and cash flow improvements.

Income Statement

Positive

STMicroelectronics shows strong profitability with a consistent gross profit margin of 37.5% in TTM. However, there is a noticeable decline in revenue from $13.269B in 2024 to $12.322B in TTM, indicating a revenue growth rate of -7.14%. The net profit margin stands at 8.93% for TTM, reflecting effective cost management. Despite the revenue decline, profitability metrics such as EBIT margin at 8.88% and EBITDA margin at 23.39% remain robust, underscoring operational efficiency.

Balance Sheet

Very Positive

The company maintains a healthy balance sheet with a debt-to-equity ratio of 0.16, indicating low leverage. The equity ratio is strong at 71.1%, showing that a significant portion of assets is financed by equity. Return on equity (ROE) is solid at 6.21%, reflecting effective use of equity capital. The balance sheet stability is a strong point for STMicroelectronics, allowing for potential growth opportunities.

Cash Flow

Positive

Cash flow analysis highlights a challenging environment with a decrease in free cash flow from $1.456B in 2023 to $235M in TTM, marking substantial volatility. The operating cash flow to net income ratio is 2.43, which indicates strong cash generation capability relative to net income. However, the free cash flow to net income ratio is only 0.21, suggesting limited free cash generation relative to net income, posing a potential risk if this trend continues.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	13.27B	17.29B	16.13B	12.76B	10.22B
Gross Profit	5.22B	8.29B	7.33B	5.05B	3.40B
EBITDA	3.72B	6.38B	6.40B	3.61B	2.27B
Net Income	1.56B	4.21B	3.96B	2.00B	694.00M
Balance Sheet
Total Assets	24.74B	24.45B	20.99B	16.41B	15.31B
Cash, Cash Equivalents and Short-Term Investments	6.18B	6.08B	4.59B	3.52B	3.85B
Total Debt	3.17B	3.17B	2.57B	2.53B	2.62B
Total Liabilities	7.06B	7.60B	7.48B	6.83B	7.00B
Stockholders Equity	17.45B	16.73B	13.44B	9.52B	8.25B
Cash Flow
Free Cash Flow	-216.00M	1.46B	2.05B	1.19B	804.00M
Operating Cash Flow	2.96B	5.99B	5.58B	3.46B	2.46B
Investing Cash Flow	-3.74B	-5.71B	-4.98B	-1.86B	-2.34B
Financing Cash Flow	-155.00M	-267.00M	-556.00M	-1.37B	279.00M

STMicroelectronics Technical Analysis

Technical Analysis Sentiment

Positive

Last Price33.41

Price Trends

50DMA

28.98

Positive

100DMA

25.83

Positive

200DMA

25.71

Positive

Market Momentum

MACD

1.05

Positive

RSI

54.90

Neutral

STOCH

67.43

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STM, the sentiment is Positive. The current price of 33.41 is above the 20-day moving average (MA) of 31.70, above the 50-day MA of 28.98, and above the 200-day MA of 25.71, indicating a bullish trend. The MACD of 1.05 indicates Positive momentum. The RSI at 54.90 is Neutral, neither overbought nor oversold. The STOCH value of 67.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for STM.

STMicroelectronics Risk Analysis

STMicroelectronics disclosed 33 risk factors in its most recent earnings report. STMicroelectronics reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 1 New Risks

Individual customer use of certain products, which may differ from the anticipated uses of such products and result in differences in performance, including energy consumption, may lead to a failure to achieve our disclosed emission-reduction goals, adverse legal action or additional research costs. Q4, 2024

STMicroelectronics Peers Comparison

Overall Rating

UnderperformOutperform

Sector (50)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UMC	80 Outperform	$18.39B	13.31	11.65%	0.63%	2.22%	-22.39%
STM	76 Outperform	$29.68B	28.53	6.32%	0.96%	-25.47%	-70.07%
ASX	74 Outperform	$22.35B	21.01	11.47%	0.25%	1.32%	4.86%
ON	72 Outperform	$26.10B	43.32	7.85%	―	-18.28%	-70.98%
GFS	68 Neutral	$22.28B	28.15	-1.69%	―	-4.42%	-120.96%
MCHP	64 Neutral	$40.62B	84.25	>-0.01%	2.59%	-42.35%	-100.12%
Sector *	50 Neutral	C$3.06B	2.41	-63.57%	2.26%	4.49%	-6.15%

* Technology Sector Average

Performance Comparison

STM

STMicroelectronics

31.77

-7.32

-18.73%

ASX

ASE Technology Holding Co

10.58

0.25

2.42%

MCHP

Microchip

70.25

-13.97

-16.59%

ON Semiconductor

59.61

-10.50

-14.98%

UMC

United Micro

7.48

0.33

4.62%

GFS

GlobalFoundries Inc

40.13

-11.58

-22.39%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 03, 2025