Gasgoo Munich- STMicroelectronics (STM.US) released its second-quarter earnings report on July 23. Net revenue for the quarter hit $3.49 billion, up 26.0% year-on-year and beating analyst expectations of $3.47 billion. Net income came in at $222 million, reversing a net loss of $97 million a year earlier. Non-GAAP earnings per share stood at $0.31, topping market forecasts of $0.26.Yet the results failed to lift the stock. The company's midpoint guidance for third-quarter revenue — just $3.7 billion — fell well short of the $3.9 billion analysts had anticipated. Shares in Europe tumbled as much as 17% following the release.Analysts at Citi noted that while the recovery in automotive and industrial markets is underway, expectations are already fully priced in, leaving little room for upward revisions — a setup that leaves the stock vulnerable to a pullback. Operating income for the quarter reached just $187 million, significantly missing the $234 million target. Meanwhile, EBITDA came in at $679 million and free cash flow at $83 million, both falling short of market expectations.Profitability faced pressure, largely due to asset impairments, restructuring costs, and accounting impacts from the acquisition of NXP's MEMS business. Still, inventory days dropped from 140 to 126 — slipping below the company's standard target level and signaling a positive turn in the demand cycle.Breaking down the performance: revenue for the Analog, MEMS, and Sensors (AM&S) group rose 26.0%, with operating profit jumping 69.2%. The Embedded Processing (EMP) division saw a 35.5% sales increase and a near-doubling of operating profit, up 97.8%. The Power & Discrete (P&D) unit, however, lagged behind with sales up just 3.7%, and its operating loss widened from $56 million to $99 million.The AI data center business emerged as the clear standout. The company raised its targets for the segment again, projecting revenue will top $1 billion in 2026 and surge well past $2 billion in 2027. CEO Jean-Marc Chery added that fourth-quarter revenue is poised to break the $4 billion mark, driven by AI data center deployments and low-earth-orbit satellite communication projects.By end market, automotive revenue climbed 14% quarter-over-quarter and 16% year-on-year. The industrial sector rose 20% sequentially and 34% annually, while communications equipment and computer peripherals surged 50% from a year ago.
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