STMicroelectronics (STM) AI Stock Analysis

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STMicroelectronics

(NYSE:STM)

Rating:60Neutral

Price Target:

$28.00

▲(6.67% Upside)

STMicroelectronics faces challenges with declining revenue and profitability, but maintains a strong financial structure. Technical indicators suggest bearish sentiment, and valuation metrics indicate potential overvaluation. The earnings call highlighted both strategic investments for future growth and ongoing operational challenges.

Positive Factors

Inventory Management

Disti inventories declined substantially, indicating improved inventory management.

Market Geography

China remains the strongest end market geography for STMicroelectronics.

Revenue Growth

Revenue is expected to return to year-over-year growth in 4Q after eight consecutive quarters of decline.

Negative Factors

Automotive Revenue

Automotive revenue is impacted by weak EV demand and competition in China.

Gross Margin

A weak USD stifling GM% expansion is a reality that might have staying power as a headwind to EPS leverage.

Tesla Exposure

Tesla exposure continues to drive volatility in the model as deliveries suffer from weak Y/Y compares.

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

Market Cap

$22.43B

Dividend Yield1.17%

Average Volume (3M)8.08M

Price to Earnings (P/E)36.1

Beta (1Y)1.56

Revenue Growth-22.97%

EPS Growth-78.58%

CountryUS

Employees49,602

SectorTechnology

Sector Strength96

IndustrySemiconductors

Share Statistics

EPS (TTM)-0.11

Shares Outstanding902,771,060

10 Day Avg. Volume7,821,186

30 Day Avg. Volume8,084,390

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)0.00

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.09

Enterprise Value/Revenue2.06

Enterprise Value/Gross Profit5.74

Enterprise Value/Ebitda10.28

Forecast

1Y Price Target

$31.64

Price Target Upside20.53% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering9

STMicroelectronics Business Overview & Revenue Model

Company DescriptionSTMicroelectronics (STM) is a global semiconductor leader serving various sectors, including automotive, industrial, personal electronics, communications equipment, and computer peripherals. The company designs, develops, manufactures, and markets a wide range of semiconductor products, including microcontrollers, sensors, power management devices, and integrated circuits. STM is also a key player in the Internet of Things (IoT) and automotive markets, providing innovative solutions that enhance performance and energy efficiency.

How the Company Makes MoneySTMicroelectronics generates revenue primarily through the sale of semiconductor products across multiple sectors. Key revenue streams include sales of integrated circuits, microcontrollers, and sensors, which are utilized in consumer electronics, automotive applications, and industrial automation. STM benefits from strategic partnerships with major technology companies and OEMs, allowing it to integrate its products into a wide range of applications. Additionally, the company's investment in research and development enables it to innovate and capture emerging market opportunities, particularly in IoT and electric vehicle technologies. Fluctuations in demand for electronics and advancements in technology significantly influence STM's earnings.

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 is experiencing a notable decline in revenue from its Analog Power and Microcontrollers segments, reflecting broader challenges in the semiconductor market. Despite sequential growth in automotive and industrial sectors, the company faces significant year-over-year revenue declines across several segments, including a 22.2% drop in Power and Discrete. The earnings call highlights a strategic focus on reshaping manufacturing to achieve cost savings, which could mitigate future margin pressures. However, current gross margin challenges and an operating loss underscore the need for careful navigation in a competitive landscape.

Data provided by:

Main Street Data

STMicroelectronics Earnings Call Summary

Earnings Call Date:Jul 24, 2025

(Q2-2025)

% Change Since: -17.37%|

Next Earnings Date:Oct 23, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mix of positive and negative aspects. There was strong sequential growth in certain segments and notable sustainability achievements. However, significant year-over-year declines in revenue, gross margin, and net income, along with an operating loss, indicate challenges. The sentiment is balanced between the highlights and lowlights.

Q2-2025 Updates

Positive Updates

Q2 Revenue Exceeds Midpoint

STMicroelectronics delivered Q2 revenues of $2.77 billion, which was $56 million above the midpoint of their business outlook range.

Strong Sequential Growth in Automotive and Industrial

Automotive revenues grew about 14% sequentially, driven by Asia Pacific (excluding China) and the Americas. Industrial revenues were above expectations with strong sequential growth and continued year-over-year improvement.

Sustainability Recognitions

ST was recognized in the Time World's Most Sustainable Companies List for the second consecutive year and was ranked 25th most sustainable company globally. It also received an A list from CDP for climate change and A- for water security.

STM32 Microcontrollers Growth

STMicroelectronics reported year-over-year growth in general purpose microcontrollers with both sequential and year-over-year growth in the high teens.

Negative Updates

Year-Over-Year Revenue Decline

Q2 revenues decreased across several segments: Analog products, MEMS and Sensors down 15.2%, Power and Discrete down 22.2%, and Embedded Processing down 6.5%. Automotive declined by about 24% year-over-year.

Gross Margin Pressure

Gross margin was at 33.5%, decreasing 660 basis points year-over-year, mainly due to unfavorable product mix, lower manufacturing efficiency, and higher unused capacity charges.

Operating Loss

Reported an operating loss of $133 million, which included $190 million for impairment and restructuring charges.

Net Income Decline

Q2 '25 net income was a negative $97 million compared to a positive $353 million in the year-ago quarter.

Company Guidance

In the STMicroelectronics second quarter 2025 earnings call, the company provided several key financial metrics and business insights. Revenues reached $2.77 billion, surpassing the midpoint of their business outlook by $56 million, although gross margins stood at 33.5%, aligning with expectations. Automotive revenues grew 14% sequentially, with a book-to-bill ratio below parity due to specific customer dynamics. Industrial revenues exceeded expectations, showcasing sequential and year-over-year growth, supported by a book-to-bill ratio above 1. STMicroelectronics anticipates third-quarter revenues of $3.17 billion, with an expected sequential growth of 14.6% but a year-over-year decline of 2.5%. The company plans to maintain annual capital expenditures between $2 billion and $2.3 billion to reshape its manufacturing footprint, aiming for annual cost savings in the high triple million-dollar range by 2027. Despite facing challenges in the automotive sector, the company remains optimistic about sequential growth in subsequent quarters.

STMicroelectronics Financial Statement Overview

Summary

STMicroelectronics demonstrates strong profitability with robust margins and low leverage. However, recent declines in revenue and free cash flow signal potential areas of concern. The company's solid balance sheet provides a foundation for future growth, but attention to revenue growth and cash flow improvements is essential.

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

Neutral

Last Price26.25

Price Trends

50DMA

29.03

Negative

100DMA

25.93

Positive

200DMA

25.57

Positive

Market Momentum

MACD

-1.34

Positive

RSI

42.63

Neutral

STOCH

43.68

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STM, the sentiment is Neutral. The current price of 26.25 is below the 20-day moving average (MA) of 27.66, below the 50-day MA of 29.03, and above the 200-day MA of 25.57, indicating a neutral trend. The MACD of -1.34 indicates Positive momentum. The RSI at 42.63 is Neutral, neither overbought nor oversold. The STOCH value of 43.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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	71 Outperform	$16.95B	13.57	10.98%	7.09%	5.46%	-26.72%
ASX	66 Neutral	$21.95B	20.40	10.97%	3.51%	4.86%	6.44%
ON	63 Neutral	$19.26B	43.94	5.72%	―	-17.93%	-75.83%
STM	60 Neutral	$22.43B	36.11	3.72%	1.17%	-22.97%	-78.58%
MCHP	58 Neutral	$32.89B	84.25	-2.24%	2.82%	-35.70%	-113.08%
GFS	51 Neutral	$17.48B	28.15	-1.01%	―	-0.65%	-114.26%
Sector *	50 Neutral	AU$1.64B	3.52	-0.63%	3.31%	16.41%	-5.22%

* Technology Sector Average

Performance Comparison

STM

STMicroelectronics

26.25

-3.40

-11.47%

ASX

ASE Technology Holding Co

10.13

0.64

6.74%

MCHP

Microchip

64.50

-12.49

-16.22%

ON Semiconductor

50.01

-22.90

-31.41%

UMC

United Micro

6.81

-1.53

-18.35%

GFS

GlobalFoundries Inc

32.84

-12.02

-26.79%

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 27, 2025