Shares of STMicroelectronics NV (STM) plunged 11.25% in pre-market trading on Thursday following the company's release of its third-quarter results and fourth-quarter outlook. The European chip maker's forecast for the upcoming quarter fell short of analyst expectations, signaling a slower-than-anticipated recovery in the semiconductor industry.

For the fourth quarter, STMicroelectronics projects revenue of approximately $3.28 billion, which is below the average analyst estimate of $3.35 billion. This outlook translates to a full-year 2025 revenue forecast of about $11.75 billion, marking a significant decline from the $13.27 billion reported in 2024. The company attributed this underwhelming projection to a sluggish recovery in demand for chips used in automotive and industrial applications, as customers continue to work through inventories built up during the pandemic.

Despite reporting better-than-expected third-quarter results, with revenue of $3.19 billion slightly above analyst estimates, investors focused on the disappointing forward guidance. The company's gross margin of 33.2% for Q3 fell short of expectations, primarily due to lower manufacturing efficiencies and negative currency effects. In response to current market conditions, STMicroelectronics has reduced its annual capital expenditure plan to slightly below $2 billion, down from its previous forecast of $2 billion to $2.3 billion.

Analysts have expressed concerns about the company's outlook. Jefferies analysts noted that "the sales momentum is below expectations," while J.P.Morgan commented that the guidance "confirms what the market heard from Texas Instruments that though the industry is in an up-cycle, the up-cycle is very muted." The semiconductor industry continues to face challenges from geopolitical tensions, including U.S.-China trade frictions and restrictions on chip exports, which are impacting customer orders and overall market dynamics.