STMicro nearly doubles quarterly profit, sees Q4 sales exceeding $4 billion

STMicro Doubles Profit, Forecasts Over $4B in Q4 Sales on AI Boost

STMicroelectronics Surpasses Expectations with Strong Q3 Performance

By Nathan Vifflin and Fabrizio La Rocca

Q3 Operating Profit and Revenue Highlights

Oct 29 (Reuters) - STMicroelectronics reported a third-quarter operating profit above market expectations on Thursday, as demand from AI data centres and satellite operators added to a broader recovery in the chipmaker's markets.

Operating income excluding one-off charges was $429 million, nearly doubling from a year ago and beating the $400.5 million expected by analysts polled by LSEG.

Q4 Revenue Forecast

The Franco-Italian chipmaker said it expected fourth-quarter revenue of $4.15 billion, up from $3.76 billion in the third quarter, give or take 3.5%. Analysts polled by LSEG had expected $4.10 billion.

CEO Statement on Strategic Roadmap

"In an environment where demand remains well above supply, we continue to expand capacity aligned with ST's strategic roadmap," CEO Jean-Marc Chery said in the earnings statement.

Growth Drivers and Market Segments

STMicro, which makes chips ranging from microcontrollers to sensors and power semiconductors for cars, factories and smartphones, said higher sales of communication equipment, computer peripherals and personal electronics drove the beat.

It had said already in July that fourth-quarter sales would be more than $4 billion. Chery said on Thursday that company-specific drivers, including AI data centre demand and low-Earth-orbit satellite communications, were adding to the cyclical recovery.

Gross Margin Improvement

The company's gross margin rose to 37.3% in the third quarter from 33.2% a year ago, helped by a higher share of sales from more profitable chips and lower costs from idle factory capacity. STMicro expects the margin to rise to about 39% in the fourth quarter.

Analyst Outlook

Jefferies analysts expect STMicro's growth to continue into 2027, as data centre revenue is set to roughly double from this year to the next, while gross margins see "more significant upside towards the end of next year", they wrote in an early take on the report.

(Reporting by Nathan Vifflin and Fabrizio La Rocca in Gdansk, editing by Milla Nissi-Prussak)