STMicroelectronics (STM) Stock Drops 15% After Q3 Guidance Disappoints

TLDR

• STM stock dropped as much as 15% after Q3 revenue guidance came in below analyst expectations.
• Q3 revenue forecast is $3.70 billion, missing the consensus estimate of $3.76–$3.80 billion.
• Q2 net income came in at $222 million, reversing a $97 million loss from the same period last year.
• Q2 net revenues rose 12.7% year-on-year to $3.49 billion, driven by AI data center demand.
• CEO Jean-Marc Chery forecast Q4 revenue above $4 billion, with data center revenue expected to top $1 billion in 2026.

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STMicroelectronics (STM) stock dropped as much as 15% in European trading on Thursday, hitting around $59 per share in premarket trade in the US, after the company’s Q3 revenue forecast fell short of what Wall Street was expecting.

STMicroelectronics N.V., STM

The company guided for Q3 net revenues of approximately $3.70 billion. That missed analyst consensus estimates of between $3.76 billion and $3.80 billion — not a massive gap, but enough to spook the market.

Gross margin for Q3 is forecast at around 37.0%, up from 34.8% in Q2 and slightly above the consensus estimate of 36.5%.

🚨 STMicroelectronics $STM plunges ~16% despite beating earnings 📉

Shares are down sharply after Q2 results, suggesting investors are looking beyond the headline beat.

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📊 Q2 HIGHLIGHTS

🟢 Revenue: $3.49B (+26% YoY)

🟢 EPS: $0.31… https://t.co/mPQcQnV9hL pic.twitter.com/kd1NfhSf9Y

— Emmanuel – Big Tech & AI Investor (@EmmanuelInvest) July 23, 2026

The irony is that Q2 itself was actually pretty solid.

STMicro posted Q2 net income of $222 million, a sharp turnaround from a net loss of $97 million in the same period a year ago. Earnings per share came in at $0.31, a 416.7% year-on-year increase, and in line with estimates.

Net revenues for Q2 rose 12.7% year-on-year to $3.49 billion, fueled largely by strong demand for microprocessor components from AI data centers.

AI Data Center Business Is Growing Fast

The company’s AI data center business has become a key part of its growth story. CEO Jean-Marc Chery said AI data centers are a major driver of the company’s positive outlook, with data center revenues expected to exceed $1 billion in full-year 2026.

That figure is projected to more than double to over $2 billion by 2027.

Chery also forecast Q4 revenue above $4 billion, suggesting the Q3 softness may be short-lived.

STMicro’s product range covers microelectric components used across consumer electronics, automotive, and industrial applications. Its growing AI exposure has drawn more investor attention in recent quarters as data center buildouts accelerate.

Valuation Raises Questions

Despite the strong Q2 numbers and forward-looking AI revenue targets, STM’s valuation is drawing scrutiny.

The stock currently trades at a P/E ratio of around 428x, well above its historical median. Financial data firm GuruFocus rates the stock as “Significantly Overvalued” based on its GF Value metric.

The company does show strength on other financial metrics. It carries a debt-to-equity ratio of just 0.16, and GuruFocus gives it a GF Score of 72 out of 100, reflecting solid marks for financial strength, profitability, and growth.

There has been no insider buying or selling activity reported in the past 12 months.

STM stock came into Thursday’s session up roughly 0.52% year-to-date prior to the earnings drop.