STMicroelectronics NV ADR RegS (STM.US) Q3 results mixed, guidance beats expectations; AI and satellite communications demand support growth.

STMicroelectronics NV ADR RegS (STM.US) reported third-quarter 2026 financial results and provided fourth-quarter guidance above market expectations, indicating continued recovery in chip demand. Data showed that the company's third-quarter revenue was US$3.76 billion, up 17.9% year-over-year, beating market expectations; Non-GAAP earnings per share were US$0.37, slightly below market expectations. Third-quarter net cash from operating activities was US$1.020 billion, compared with US$549 million in the same period last year; net capital expenditure was US$643 million, compared with US$401 million in the same period last year; free cash flow was positive at US$351 million, compared with positive US$130 million in the same period last year. Looking ahead, the company expects fourth-quarter revenue with a midpoint of US$4.15 billion, up about 10.5% quarter-over-quarter, above the market expectation of US$4.12 billion; gross margin is expected to be 39.0%, compared with the market's previous expectation of 38.2%. AI and satellite communications demand support growth STMicroelectronics NV ADR RegS's customers include Apple Inc. and Tesla, Inc. Chief Executive Officer Jean-Marc Chery said in July this year that fourth-quarter revenue would accelerate, driven by demand from AI data centers and low-earth-orbit satellite communications. Previously announced results fell short of expectations, causing the stock to plunge as much as 17% at one point, the largest intraday drop in a year. STMicroelectronics NV ADR RegS is working to diversify beyond its core automotive and industrial markets. Along with peers such as Infineon, the company is targeting demand for power management chips brought by AI data center constructionchips used to support advanced processors from manufacturers such as NVIDIA Corporation. As the automotive chip market recovers from a prolonged downturn, this positioning provides a potential source of growth. However, investors remain cautious on the semiconductor sector, worried about the sustainability of AI infrastructure spending and competition from Chinese chipmakers. Rival NXP Semiconductors NV fell after issuing weaker-than-expected revenue guidance on Wednesday. JPMorgan analysts including Sandeep Deshpande wrote in a report before the earnings release that STMicroelectronics NV ADR RegS has demonstrated confidence in strong AI-related orders, which should support the company in achieving better-than-normal seasonal growth, and expected gross margin to improve from the previous quarter. Texas Instruments Incorporated last week gave strong revenue guidance, citing "broad-based growth" in industrial, automotive and data center demand, and said it plans to expand capacity to meet demand.