Artisan Global Opportunities Fund on STMicroelectronics N.V.
Thesis
STMicroelectronics makes analog and other semiconductors used in industrial, automotive, communications and consumer markets. The manager initiated a small Garden position because gross margins appear to be bottoming and earnings revisions are starting to recover. Improved factory utilization could meaningfully lift earnings power. Expansion into data center, AI and low-Earth-orbit satellite applications provides additional secular growth potential at what the manager considers a reasonable valuation.
“We anticipate earnings power could improve meaningfully as utilization recovers”
Key risks
- The anticipated analog semiconductor upcycle could fail to materialize.
- Factory utilization and gross margins might recover more slowly than expected.
- Newer AI, data center and satellite end markets may take time to become material earnings drivers.