STMicro's Q3 revenue view slightly lags estimates even as chip demand recovers

STMicroelectronics (STMicro) has projected its third-quarter revenue to be slightly below market expectations, despite observing a recovery in chip demand across various key sectors. The Franco-Italian chipmaker anticipates third-quarter revenue to be around $3.70 billion, with a 3.5% margin of error, falling just short of the $3.72 billion average estimate from analysts.

Despite the slight miss on revenue forecast, the company highlighted positive trends. Jean-Marc Chery, STMicro CEO, stated in a release that demand increased during the quarter, with strong bookings noted across all end markets. He also pointed to improved visibility and signs of tight supply in several product categories, indicating a strengthening market.

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During the quarter demand increased further, with strong bookings in all end markets. We saw improved visibility and signs of tight supply in several product categories.

Looking ahead, STMicro expects revenue growth to accelerate in the fourth quarter, driven significantly by customer programs in AI data centers and LEO satellite communications. The company forecasts fourth-quarter revenues to surpass $4 billion. This outlook suggests a robust end to the year, building on the recovering demand observed in the automotive, AI-related, data center optical, and consumer electronics markets.

In the second quarter, STMicro reported revenue of $3.49 billion, exceeding analysts' average estimate of $3.39 billion. However, its earnings before interest, taxes, depreciation, and amortization (EBITDA) were $679 million, falling notably short of market expectations, which stood at $797.7 million. This mixed performance underscores the company's efforts to navigate a prolonged downturn in its automotive and industrial markets while capitalizing on emerging growth areas.

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We anticipate a revenue growth acceleration in Q4, mainly driven by our engaged customer programs in AI datacenters and LEO satellite communication. We expect Q4 revenues to be above $4 billion.