We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Physical AI Strengthen STMicroelectronics' Industrial Business?
Read MoreHide Full Article
Key Takeaways
STMicroelectronics' Industrial revenues jumped 34% year over year and 20% sequentially in Q2 2026.
New AI-enabled MEMS sensors and 3D LiDAR target robotics, industrial automation and smart buildings.
The NVIDIA Halos collaboration boosts STM's robotics and industrial offerings with chips and software.
STMicroelectronics N.V. (STM - Free Report) is seeing stronger demand across industrial markets as applications such as factory automation, robotics and power infrastructure adopt physical AI. In the second quarter of 2026, Industrial revenues increased 34% year over year and 20% sequentially. Growth was driven by general-purpose microcontrollers, analog products, application-specific analog and power conversion products. Distribution inventory also declined further and moved below the company’s standard target.
The company is also expanding its product portfolio for physical AI applications. STM introduced industrial MEMS sensors with embedded AI for condition monitoring. A new compact 3D LiDAR module was also launched to provide AI-ready data for low-compute Edge AI systems. The products target applications including robotics, industrial automation and smart buildings.
STMicroelectronics is further building its position through the collaboration with NVIDIA Corporation (NVDA - Free Report) . Under NVIDIA Halos, the company is supporting robotics and industrial applications with microcontrollers, sensors, motor control and security solutions. The collaboration covers chips, evaluation kits, software and reference designs.
The combination of improving industrial demand and new physical AI products could provide further support to the business. Stronger factory automation and robotics activity may increase demand for intelligent sensing, real-time control and power management. With distribution inventories already below the standard target, the company could also benefit from further demand recovery. These factors could help physical AI become a more meaningful part of STMicroelectronics’ industrial business.
How STMicroelectronics Stacks Up Against Industry Peers
STMicroelectronics competes with Broadcom Inc. (AVGO - Free Report) and Marvell Technology, Inc. (MRVL - Free Report) across optical connectivity, networking and semiconductor solutions for AI infrastructure. Both companies are expanding their exposure to higher-speed connectivity as AI systems require greater bandwidth between processors, servers and data centers.
Broadcom has a broad AI semiconductor portfolio spanning networking, optical components and custom AI accelerators. AI semiconductor revenues reached a record $10.8 billion in the second quarter, up 143% year over year, with networking accounting for almost 40% of AI revenues. The company also has a strong position in co-packaged optics, 1.6-terabit-per-second DSPs, continuous-wave and EML lasers. Broadcom is preparing a 200-terabit Ethernet switch and has been shipping its 100-terabit Tomahawk 6 switch.
Marvell has a more direct focus on high-speed optical interconnect and silicon photonics. Data center revenues reached a record $1.83 billion in the first quarter of fiscal 2027, up 27% year over year. Interconnect revenues are expected to grow more than 70% in fiscal 2027, supported by demand for 800G and 1.6T solutions. The company is also expanding into silicon photonics through its NVIDIA partnership and expects the scale-up optics business to ramp significantly.
Both Broadcom and Marvell have sizeable exposure to AI-driven connectivity demand. Broadcom combines optical connectivity with networking and custom AI silicon, while Marvell has a broader optical interconnect portfolio spanning DSPs, TIAs, drivers and silicon photonics. This positions both companies to benefit as AI infrastructure shifts toward higher-speed networking and optical connectivity.
STM Stock’s Price Performance & Valuation Trend
Shares of this multinational semiconductor and electronics company soared 91.4% year to date, significantly outperforming the Zacks Semiconductor - General industry, the broader Zacks Computer and Technology sector and the S&P 500 Index.
STM Price Performance (YTD)
Image Source: Zacks Investment Research
STM stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 21.93, as evidenced by the chart below.
STM Valuation (P/E F12M)
Image Source: Zacks Investment Research
EPS Trend of STMicroelectronics
STM’s earnings estimates for 2026 have moved upward in the past 60 days to $1.30, but the same for 2027 moved down to $2.77 per share. The revised estimates for 2026 and 2027 imply a significant year-over-year surge of 145.3% and 113.3%, respectively.
View the Zacks #1 Rank List
Image: Bigstock
Can Physical AI Strengthen STMicroelectronics' Industrial Business?
Key Takeaways
STMicroelectronics N.V. (STM - Free Report) is seeing stronger demand across industrial markets as applications such as factory automation, robotics and power infrastructure adopt physical AI. In the second quarter of 2026, Industrial revenues increased 34% year over year and 20% sequentially. Growth was driven by general-purpose microcontrollers, analog products, application-specific analog and power conversion products. Distribution inventory also declined further and moved below the company’s standard target.
The company is also expanding its product portfolio for physical AI applications. STM introduced industrial MEMS sensors with embedded AI for condition monitoring. A new compact 3D LiDAR module was also launched to provide AI-ready data for low-compute Edge AI systems. The products target applications including robotics, industrial automation and smart buildings.
STMicroelectronics is further building its position through the collaboration with NVIDIA Corporation (NVDA - Free Report) . Under NVIDIA Halos, the company is supporting robotics and industrial applications with microcontrollers, sensors, motor control and security solutions. The collaboration covers chips, evaluation kits, software and reference designs.
The combination of improving industrial demand and new physical AI products could provide further support to the business. Stronger factory automation and robotics activity may increase demand for intelligent sensing, real-time control and power management. With distribution inventories already below the standard target, the company could also benefit from further demand recovery. These factors could help physical AI become a more meaningful part of STMicroelectronics’ industrial business.
How STMicroelectronics Stacks Up Against Industry Peers
STMicroelectronics competes with Broadcom Inc. (AVGO - Free Report) and Marvell Technology, Inc. (MRVL - Free Report) across optical connectivity, networking and semiconductor solutions for AI infrastructure. Both companies are expanding their exposure to higher-speed connectivity as AI systems require greater bandwidth between processors, servers and data centers.
Broadcom has a broad AI semiconductor portfolio spanning networking, optical components and custom AI accelerators. AI semiconductor revenues reached a record $10.8 billion in the second quarter, up 143% year over year, with networking accounting for almost 40% of AI revenues. The company also has a strong position in co-packaged optics, 1.6-terabit-per-second DSPs, continuous-wave and EML lasers. Broadcom is preparing a 200-terabit Ethernet switch and has been shipping its 100-terabit Tomahawk 6 switch.
Marvell has a more direct focus on high-speed optical interconnect and silicon photonics. Data center revenues reached a record $1.83 billion in the first quarter of fiscal 2027, up 27% year over year. Interconnect revenues are expected to grow more than 70% in fiscal 2027, supported by demand for 800G and 1.6T solutions. The company is also expanding into silicon photonics through its NVIDIA partnership and expects the scale-up optics business to ramp significantly.
Both Broadcom and Marvell have sizeable exposure to AI-driven connectivity demand. Broadcom combines optical connectivity with networking and custom AI silicon, while Marvell has a broader optical interconnect portfolio spanning DSPs, TIAs, drivers and silicon photonics. This positions both companies to benefit as AI infrastructure shifts toward higher-speed networking and optical connectivity.
STM Stock’s Price Performance & Valuation Trend
Shares of this multinational semiconductor and electronics company soared 91.4% year to date, significantly outperforming the Zacks Semiconductor - General industry, the broader Zacks Computer and Technology sector and the S&P 500 Index.
STM Price Performance (YTD)
Image Source: Zacks Investment Research
STM stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 21.93, as evidenced by the chart below.
STM Valuation (P/E F12M)
Image Source: Zacks Investment Research
EPS Trend of STMicroelectronics
STM’s earnings estimates for 2026 have moved upward in the past 60 days to $1.30, but the same for 2027 moved down to $2.77 per share. The revised estimates for 2026 and 2027 imply a significant year-over-year surge of 145.3% and 113.3%, respectively.
Image Source: Zacks Investment Research
STMicroelectronics currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.