Investment Rating - The report maintains a positive outlook on STMicroelectronics, indicating an outperform rating based on expected revenue growth and margin recovery in the upcoming quarters [6][9]. Core Insights - STMicroelectronics reported better-than-expected 3Q25 results with revenue of $3.19 billion and EPS of $0.26, driven by strong performance in Personal Electronics and automotive sectors [6][7]. - The company expects 4Q25 revenue to reach approximately $3.3 billion, reflecting a 2.9% quarter-over-quarter growth, with a gross margin target of 35% [9]. - Management anticipates a recovery in 2026, particularly in the second half, as channel inventory normalizes and new projects ramp up [9]. Summary by Sections 1. Earnings Performance - 3Q25 revenue was $3.19 billion, exceeding market expectations of $3.17 billion, with a gross margin of 33.2% [6][7]. - Personal Electronics saw a significant increase of 40% quarter-over-quarter, while automotive and industrial sectors also showed growth [7][8]. 2. Margin and Cash Flow - Gross margin improved due to manufacturing efficiency gains and reduced idle capacity costs, with a non-GAAP operating profit of $180 million [8]. - Free cash flow turned positive at $130 million, driven by working capital release and lower capital expenditures [8]. 3. Future Outlook - For 4Q25, STMicroelectronics expects revenue of about $3.3 billion and a gross margin of 35% [9]. - The company projects a soft first half in 2026 but anticipates a clear recovery in the second half, particularly in SiC revenues due to increased demand [9].