STMicroelectronics N.V.

Global stock markets fell amid escalating tensions in the Middle East. The Dow Jones Industrial Average closed at 51,711.65, down 506.93 points or 0.97%. The S&P 500 ended at 7,408.30, losing 90.66 points or 1.21%. The Nasdaq Composite finished at 25,137.69, dropping 553.21 points or 2.15%. Surging oil prices were the main drag, sparking inflation fears and pushing bond yields higher. Meanwhile, earnings from major technology companies added to concerns about massive spending on artificial intelligence infrastructure. Brent crude futures surged past 100 dollars a barrel for the first time since May, and West Texas Intermediate crude settled above 92 dollars, after the US military launched a new wave of airstrikes against Iran and Iran retaliated by attacking US bases in the region. President Donald Trump also signaled threats of major military action against Iran and the Houthis, after the Houthis attacked two Saudi oil tankers in the Red Sea. In European markets, the Stoxx 600 index closed at 639.27, down 7.66 points or 1.18%, with technology stocks falling 2.9%, led by STMicroelectronics which plunged 17.7% after forecasting third-quarter revenue below expectations. Asian markets opened lower this morning, with Japan's Nikkei index opening down the most in the region at 1.26%, followed by South Korea's Kospi index tumbling 2.58%, while Hong Kong's Hang Seng Index, China's Shanghai Composite Index, and Australia's S&P/ASX 200 all also declined. The Thai stock market is expected to consolidate in line with global trends. A stock to watch is Gulf, after its subsidiary Gulf Edge announced a partnership with Cognizant, a global leader in technology and AI development, to form a strategic collaboration in artificial intelligence and related services, aiming to accelerate Thailand's transition into the AI era.

European stock markets closed higher on Friday, recovering from the sharp drop in the previous session, supported by strong corporate earnings. The STOXX 600 index closed at 644.51 points, up 0.82%, while Germany's DAX index surged 1.36% after SAP shares jumped 10% on higher-than-expected growth in cloud order backlog for the second quarter. European technology stocks rose 1.7%, rebounding from earlier declines, despite disappointing results from STMicroelectronics and BE Semiconductor. Deutsche Bank analysts warned that capital spending by tech giants is no longer supported solely by free cash flow, and low-cost open-source AI is seriously threatening business models. Meanwhile, three European Central Bank policymakers signaled that another rate hike may be necessary due to persistent inflation risks, with markets pricing in around a 70% chance of a 0.25% increase by the end of 2026. Valmet shares surged 22% after results beat expectations and the company announced plans to spin off a business, while Securitas shares fell 11% after profit missed forecasts, and Neste dropped 6.4% on a slight earnings miss.

Technology stocks are under pressure as the MSCI World Semiconductor Index fell 6% in July, with investors rotating away from chipmakers despite strong earnings. EPFR Global analysts noted the long-short ratio on Nasdaq 100 futures dropped 63% over the past year to a 17-year low on July 14, signaling a shift out of technology stocks. STMicroelectronics tumbled 18% after its outlook missed forecasts, while Texas Instruments declined 3% even with an upbeat outlook. Software stocks fared better, with Dassault Systemes rising on in-line results and SAP advancing after cloud revenue matched expectations. JPMorgan strategists recommended buying a call spread on the Magnificent Seven basket, citing heavily reduced positioning that could support the group if earnings hold up.

European stock markets closed with their biggest decline in more than two weeks on Thursday, with the STOXX 600 index falling 1.18% to close at 639.27 points, pressured by disappointing earnings, hawkish remarks from the European Central Bank, and a surge in crude oil prices. France's CAC-40 dropped 1.64% to close at 8,299.09 points, Germany's DAX fell 1.56% to 24,763.12 points, and London's FTSE 100 declined 0.73% to 10,639.17 points. Although the ECB held interest rates steady, comments from President Christine Lagarde led investors to see a chance of a rate hike in September. Meanwhile, Brent crude futures surged to 100 US dollars per barrel for the first time since May after Houthi forces attacked a Saudi oil tanker in the Red Sea, pushing energy stocks up 1.54%. However, food and beverage stocks tumbled 4.1%, with Nestlé plunging nearly 8%, its biggest drop since 1989, after announcing the sale of some of its water and premium beverage businesses to Platinum Equity. Technology stocks fell 2.9%, led by STMicroelectronics which slumped 17.7% after forecasting third-quarter revenue below expectations, and BE Semiconductor which dropped 7.3% after reporting second-quarter results. In contrast, Soitec surged nearly 22% after revenue beat estimates. TotalEnergies rose 2.5% on its strongest quarterly results in nearly three years, and easyJet gained 2.7% despite a 70% drop in third-quarter profit.

European markets ended notably lower on Thursday as rising Middle East tensions and a surge in oil prices fueled inflation concerns and potential rate hikes. The European Central Bank left its key interest rates unchanged, with the deposit rate at 2.25%, but ECB President Christine Lagarde strongly hinted at a rate increase in September. Brent crude futures shot up more than 7% to $101.22 a barrel. The pan-European Stoxx 600 dropped 1.18%, while Germany's DAX tumbled 1.56% and France's CAC 40 shed 1.64%. Tech stocks were hit by valuation worries amid heavy AI infrastructure spending, with STMicroelectronics plunging 16% in Paris.

STMicroelectronics fell about 12% in premarket trading after its third-quarter revenue outlook missed Wall Street expectations. The semiconductor company forecast third-quarter revenue of about $3.70 billion, up 6.2% sequentially but below the consensus estimate of $3.80 billion, with gross margin seen at 37% plus or minus 2 percentage points. Second-quarter revenue surged 26% from a year earlier to $3.49 billion and adjusted earnings rose to 31 cents a share, both topping analyst estimates, but EBITDA of $679 million fell short of the $797.7 million projection due to restructuring charges, impairment expenses, and accounting consequences from its acquisition of an NXP sensor business. Management raised its 2026 data center revenue guidance to more than $1 billion and said sales could surpass $2 billion in 2027 if demand remains strong, while projecting fourth-quarter revenues over $4 billion, helped by AI data centers and low-earth orbit satellite communications.

European semiconductor major STMicroelectronics issued third-quarter revenue guidance with a midpoint of 3.7 billion dollars, slightly below the analyst average estimate of 3.72 billion dollars based on LSEG data. The company said semiconductor demand in automotive, artificial intelligence-related, data centre optical communications, and consumer electronics markets is showing a recovery trend, and set third-quarter revenue guidance at 3.7 billion dollars, plus or minus 3.5 percent. Chief Executive Officer Jean-Marc Chery said in a statement that orders were solid across all end markets and demand expanded, and forecast that fourth-quarter revenue would exceed 4 billion dollars, driven by AI data centres and low-earth-orbit satellite communications. Second-quarter revenue was 3.49 billion dollars, beating the analyst estimate of 3.39 billion dollars, but EBITDA came in at only 679 million dollars, significantly below the market forecast of 797.7 million dollars.

The London stock market closed higher, with the FTSE 100 rebounding. Amid a global sell-off in tech stocks, consumer staples were bought, sending the FTSE 350 Personal Goods index up 2.61%, the Beverages index up 2.36%, and the Retail index up 1.92%. Pharmaceutical giant GSK rose 2.1%, while AstraZeneca gained 0.5%. Automation solutions firm Rotork surged 66.8% after Swiss heavy electrical equipment giant ABB announced its acquisition. European equity markets rose for a third straight session, with the STOXX Europe 600 up 0.16%. The Basic Resources index fell 1.38%, while the Media index climbed 1.43%. Dutch firm ASML Holding rose 3.2%, but STMicroelectronics fell 4.9% and BE Semiconductor dropped 3.2%. Norway's Telenor tumbled 11.6% after lowering its full-year outlook. In eurozone bond markets, the German 10-year yield rose 3 basis points to 3.135%, its highest since May 20. The German-US 10-year yield spread narrowed to 143 basis points. In currencies, the euro traded at 1.1446 dollars, and the dollar at 162.42 yen.

onsemi and STMicroelectronics are both well-positioned to benefit from rising semiconductor content in electric vehicles and AI infrastructure, but onsemi offers a better risk-reward balance according to a Zacks Investment Research analysis. onsemi has moved beyond the cyclical trough with revenues exceeding guidance and operating income growth roughly doubling revenue growth, while its EliteSiC platform powers about 55% of new EV models at the 2026 Beijing Auto Show and AI data center revenue more than doubled year over year. STMicroelectronics posted a 23% year-over-year revenue increase in the first quarter of 2026 and expects AI data center revenues to surpass $500 million this year, but its operating margins remain well below historical levels due to restructuring and underutilized capacity. onsemi's trailing 12-month return on invested capital stands at 9.22% versus STMicroelectronics' 1.24%, and its forward price-to-earnings ratio of 31.28 is lower than STMicroelectronics' 37.57. Analysts have raised onsemi's 2026 earnings estimate to $3.09 per share, implying 31.5% growth, while STMicroelectronics' estimate rose to $1.17, implying 120.8% growth from a depressed base. onsemi carries a Zacks Rank #2 (Buy) compared to STMicroelectronics' Zacks Rank #3 (Hold), reflecting its superior profitability, healthier returns on capital, and more attractive valuation.