STMicroelectronics slides following weak outlook, other semis follow

STMicroelectronics (NYSE:STM) surpassed third quarter 2024 consensus estimates, but the outlook fell short of expectations when it released its latest earnings report this morning.

For the quarter in progress, STMicroelectronics forecast revenue of $3.32B, which was less than the estimate of $3.38B.

The stock slid 1.5% by early afternoon trading.

“STM’s 4Q guided sales missed by 1.9% and the EBIT, we calculate, by 19.5%, but those misses are likely not as bad as investors were expecting,” said J.P. Morgan analyst Sandeep Deshpande, in an investor note. “However, the indication from the company is that, from the current weak sales, it will see an even worse seasonal 1Q.”

ST has historically seen first quarter seasonality lead to an average decline of 8.8% over the past decade, J.P. Morgan noted. However, the decline this time looks to be closer to 20%.

Citi Research also pointed out the worse-than-expected first quarter outlook.

“STMicroelectronics is still looking for the bottom of the cycle,” said Citi analyst Andrew Gardiner, in a note. “3Q revenue and 4Q guidance are in line with recently revised consensus, but ST have also, unusually at this point in the year, given guidance for the 1Q25 revenue decline to be “well above normal seasonality.'”

ST pointed out continued weakness in the automotive and industrial sectors.

“Based on our current customer order backlog and demand visibility, we anticipate a revenue decline between Q4 2024 and Q1 2025 well above normal seasonality,” said ST CEO Jean-Marc Chery.

Several semiconductor stocks trended down today as well, including Intel (NASDAQ:INTC), which slid 3% ahead of its earnings call after the bell today.

Intel CEO Pat Gelsinger plans to visit Taiwan in November to meet with Taiwan Semiconductor Manufacturing Company (TSM) chairman and CEO C. C. Wei, according to industry sources, DigiTimes reported today. These insiders do not believe recent media reports of TSMC canceling Intel’s discount.

Several news outlets, including Reuters, have reported TSMC offered Intel a 40% discount for its 3-nanometer wafers, but has since tossed the offer due to Gelsinger being “a bit rude.”

Nvidia (NVDA) and Micron Technology (MU) were both down 4.5% by afternoon trading. This matched the decline in the Philadelphia Semiconductor Index (SOX). AMD (AMD) dipped 3%.

Chip equipment makers were also lower on Thursday, led by a 4% decline in KLA Corp. (KLAC) after it released first-quarter results. Applied Materials (AMAT) and Lam Research (LRCX) were down between 2% and 3% each.