STMicroelectronics saw its stock fall as much as 15% in European trading on Thursday, touching around $59 per share in US premarket, after the company's third-quarter revenue guidance came in below analyst expectations. The chipmaker guided for Q3 net revenues of approximately $3.70 billion, missing the consensus range of $3.76 to $3.80 billion. Not a catastrophic miss on paper, but enough to send investors heading for the exit.

The sell-off landed despite a genuinely decent Q2 report. STMicro posted net income of $222 million for the second quarter, a sharp reversal from a $97 million net loss in the same period a year earlier. Earnings per share came in at $0.31, up 416.7% year-on-year and broadly in line with estimates. Q2 net revenues rose 12.7% annually to $3.49 billion, driven by strong demand for microprocessor components from AI data centers.

AI data center revenues on track to top $1 billion this year

CEO Jean-Marc Chery pointed to AI data centers as the core engine of the company's growth narrative. He expects data center revenues to exceed $1 billion for full-year 2026, then more than double to over $2 billion by 2027. Chery also projected Q4 revenue above $4 billion, framing the Q3 softness as a temporary dip rather than a structural problem. STMicro's product portfolio spans microelectronic components used in consumer electronics, automotive systems, and industrial applications, but the AI data center angle has drawn growing investor attention as buildouts accelerate.

On the margin side, Q3 gross margin is forecast at around 37.0%, up from 34.8% in Q2 and slightly ahead of the consensus estimate of 36.5%. That detail got largely buried under the revenue miss.

Valuation already under scrutiny before the drop

Even before Thursday's slide, STM's valuation was raising eyebrows. The stock had been trading at a price-to-earnings ratio of roughly 428x, well above its historical median. Financial data firm GuruFocus had flagged the stock as "Significantly Overvalued" using its GF Value metric. The 15% single-day drop does little to resolve that tension.

STM shares were among the sharpest decliners in the European semiconductor sector on Thursday morning.

This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any security.