April 23 (Reuters) - STMicroelectronics on Thursday reported first-quarter results above estimates pointing to signs of recovery in its key semiconductor markets. The Franco-Italian chipmaker reported
STMicroelectronics' beats on results and guidance boost shares
STMicroelectronics Q1 2026 Earnings Report and Market Impact
By Nathan Vifflin
April 23 (Reuters) - STMicroelectronics reported first-quarter results above market expectations on Thursday, pointing to signs of recovery in its key semiconductor markets, and forecast further growth in the second quarter.
Share Performance Following Earnings
Shares of the Franco-Italian group, one of Europe's largest semiconductor manufacturers and a bellwether for the automotive and industrial chip sectors, rose up to 10% in early trading, before paring gains to be about 7.5% higher by 0927 GMT.
Financial Highlights
Revenue and Operating Income
The chipmaker reported revenue of $3.10 billion for the first three months of 2026, versus the $3.04 billion expected by analysts polled by LSEG. Operating income was $171 million, beating expectations of $165.8 million.
Market Conditions and Demand Recovery
STMicro has been navigating a prolonged downturn in automotive and industrial semiconductors after customers spent recent years digesting excess post-pandemic inventory and cutting orders.
But company executives said demand for automotive chips returned to year-on-year growth in the quarter, while industrial demand also improved.
CEO Commentary
"We had a strong booking momentum during Q1, with book-to-bill well above one across all end markets and regions," CEO Jean-Marc Chery said during an earnings call.
Guidance and Analyst Reactions
Outlook for Second Quarter
The company forecast second-quarter revenue of $3.45 billion, which was also above market expectations of $3.21 billion.
Analyst Insights
Jefferies said in a note to investors that the revenue upside appeared to come from continued strength at Apple, data centres, low Earth orbit satellite-related systems and the recent acquisition of NXP's sensor business.
AI and Data Centre Growth
STMicro's artificial intelligence-related business is becoming a more meaningful growth driver, the company said. It expects data centre revenue to be well above $500 million in 2026 and to exceed $1 billion in 2027.
Energy Costs and Supply Agreements
Rising energy costs are not expected to materially impact the company for now, as it is partly shielded through long-term supply agreements expiring at the end of this and next year, finance chief Lorenzo Grandi said.
Future Market Outlook
STMicro is likely at the early stages of a market upturn, Jefferies analysts wrote, foreseeing further upgrades to estimates in future quarters.
(Reporting by Nathan Vifflin in Gdansk; Editing by Matt Scuffham and Milla Nissi-Prussak)
