STMicroelectronics (STM) Q1 2026 earnings summary

Executive summary

• Q1 2026 net revenues reached $3.1 billion, up 23.0% year-over-year, including $40 million from the acquired NXP MEMS sensor business, with growth driven by personal electronics, customer programs, and strong bookings across all markets.

• Gross margin was 33.8% (34.1% non-U.S. GAAP), above guidance midpoint, driven by improved product mix and normalized distribution inventory.

• Strong booking momentum with book-to-bill well above one across all end markets and regions; automotive returned to year-over-year growth, industrial and communications segments showed robust performance.

• Major strategic engagements and design wins in AI data centers, automotive, industrial automation, and LEO satellites, including a multi-year, multi-billion-dollar deal with AWS.

• Completed acquisition of NXP's MEMS sensor business, expanding sensor capabilities for automotive and industrial markets.

Financial highlights

• Analog, MEMS & Sensors grew 23.2% YoY; Embedded Processing up 31.3%; RF & Optical Communications up 33.9%; Power & Discrete down 1.8%.

• By end market YoY: communication equipment & computer peripherals up 41%, industrial up 26%, personal electronics up 21%, automotive up 15%.

• Q1 gross profit was $1.05 billion, up 24.3% YoY; gross margin up 40 bps YoY but down 140 bps sequentially.

• Q1 net income was $37 million ($122 million non-U.S. GAAP); diluted EPS $0.04 ($0.13 non-U.S. GAAP).

• Free cash flow was -$723 million, including $895 million for the NXP MEMS acquisition; net CapEx $362 million.

Outlook and guidance

• Q2 2026 revenues expected at $3.45 billion (+11.6% sequentially, +24.9% YoY); gross margin expected at 34.8% (35.2% non-U.S. GAAP).

• 2026 revenues projected to show double-digit growth, driven by AI programs and new customer engagements.

• Datacenter revenues projected above $500 million for 2026 and over $1 billion for 2027.

• H2 expected to follow usual seasonality with strong contributions from automotive, AI infrastructure, and LEO satellites.

• Gross margin expected to improve sequentially through Q3 and Q4, with further gains in 2027 as transformation programs complete.