STMicroelectronics NV: Mixed Signals – Revenue Resilience Meets Profit‑Squeeze
STMicroelectronics NV delivered a fourth‑quarter 2025 performance that is a paradox in itself. Revenues rose to €3.33 billion, a 10 % increase year‑over‑year, and the gross margin held steady at 49 %. Yet the company posted a loss of €30 million, a stark reversal from a €200 million profit recorded a year earlier. The culprit is a sharp climb in operating expenses, driven by higher raw‑material costs and aggressive R&D investments aimed at sustaining its automotive‑electronics and 5G portfolios.
Despite the bottom‑line dip, the company’s revenue trajectory remains robust. The Q4 top‑line growth of 10 % reflects sustained demand from key end‑markets: consumer electronics, telecommunications equipment, and automotive applications. Notably, STMicro’s role as a chip supplier to Tesla has been highlighted as a growth lever, with the company reporting a noticeable uptick in sales to the electric‑vehicle manufacturer in the quarter.
The earnings call on 29 January 2026 revealed that while EPS missed expectations by $0.17, the management remains optimistic for the first quarter of 2026. The guidance indicates that revenue will surpass analyst estimates, thanks to a projected increase in automotive and industrial‑electronics sales. However, the guidance is tempered by the acknowledgment that operating costs will remain elevated until the next fiscal year.
Investor sentiment, however, is mixed. The stock, currently trading at €24.97, sits 10 % below its 52‑week high of €28.425. The price‑earnings ratio of 29.225 suggests the market is still pricing in significant upside potential, but the recent loss has dampened enthusiasm.
In summary, STMicroelectronics is navigating a classic “revenues up, profits down” scenario. The company’s ability to convert top‑line growth into sustainable profitability will hinge on its cost‑control measures and the pace of adoption of its high‑margin automotive and 5G solutions. For investors, the key takeaway is that revenue resilience is a positive signal, but the loss warns that the chipmaker’s cost structure must be disciplined to unlock shareholder value.
