STM's stock is down due to customer backlogs, but strategic partnerships show promise for growth.

From Nasdaq: 2024-12-04 12:57:00

STMicroelectronics (STM) shares have dropped 48.6% YTD, underperforming the Semiconductor-General industry and the Computer & Technology sector. Competitors like NVIDIA (NVDA), Amtech Systems (ASYS), and Texas Instruments (TXN) have seen increases. This decline is due to customer backlogs and order entry deterioration, shifting priorities towards hybrid and economy models.

To recover, STM is focusing on strategic collaborations. Recent partnerships with Qualcomm Technologies for IoT solutions and Renault Group’s Ampere for EV power modules show promise. New product launches like the EVLDRIVE101-HPD motor-drive reference design and STM32 MCUs for industrial applications enhance STM’s position in the market.

Despite collaborations and innovations, STM forecasts dim Q4 and FY24 guidance with revenue declines and lower earnings projections. Challenges include macroeconomic uncertainties and inventory digestion processes. While STM offers long-term growth potential, near-term challenges suggest caution. Investors are advised to hold existing positions or wait for a better entry point.

Zacks’ Research Chief highlights STM as a stock with potential to double in the coming months. With innovative product launches and strong fundamentals, STM offers a compelling investment opportunity. However, near-term challenges exist, warranting caution. STM currently holds a Zacks Rank #3 (Hold), advising existing investors to hold and new buyers to wait for a better entry point.



Read more at Nasdaq: Can STM’s Partnership With Renault’s Ampere Push the Stock Upward?