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Investing.com -- STMicroelectronics earned a Neutral rating at Mizuho, with the brokerage balancing the company’s long-term positioning in autos, industrials and emerging AI-server opportunities against a tougher near-term backdrop stretching into 2026.
The broker set a $22 price target on the stock.
Mizuho analyst Vijay Rakesh sees STMicro benefiting from structural demand in electrification, advanced driver-assistance system (ADAS), robotaxis, and software-defined vehicles.
“We believe longer-term EV and ADAS trends should drive an improving growth outlook,” Rakesh said, adding that STM expects its Automotive business to grow at a high-single-digit (HSD) compound annual pace and its automotive microcontroller unit (MCU) revenue to double to $1 billion by 2030, supported by design wins that begin ramping in 2027.
Industrial markets also offer multi-year catalysts, from robotics and factory automation to energy storage and AI-enabled MCUs.
Rakesh also notes that STM remains a key supplier to Apple and is positioned for higher personal-electronics (PE) content as next-generation devices ramp.
“We believe Apple remains a key customer for STM’s PE business, making up, we believe, 65-70% its PE revenues,” he wrote.
But the challenge to this favorable outlook is timing. Rakesh warns that 2026 could be a difficult year as auto and industrial markets work through soft volumes and elevated inventory.
The analyst flags weaker production at major European and U.S. auto customers, projecting that vehicle output at Volkswagen, Stellantis and Tesla could fall 3–7% in 2026, while the expiration of U.S. electric-vehicle tax credits and possible subsidy cuts in China could further weigh on demand.
Furthermore, industrial recovery is described as “fairly muted” due to pricing headwinds and lingering inventory digestion.
Margins are also expected to remain constrained next year. STM ended the September quarter with gross margin of 33.2%, weighed by underutilization.
Mizuho expects those effects to persist into 2026 before easing, noting that the company maintains medium-term targets of 45% gross margin and above 50% longer term. Revenue growth of about 5% in 2026 is projected, slightly below consensus.
Despite these short-term pressures, Mizuho sees long-term drivers intact across silicon carbide (SiC), AI servers, optical interconnects and auto MCUs.