STMicroelectronics doubles data-center revenue forecast to $1bn on surging AI demand

STMicroelectronics doubles its data-centre revenue forecast to $1bn

The Franco-Italian chipmaker now expects around $1bn in data-centre sales this year, nearly twice its earlier guidance, on AI-infrastructure demand. STMicroelectronics has roughly doubled what it expects to make from data centres this year. The Franco-Italian chipmaker said on Monday it now anticipates around $1bn in data-centre revenue in 2026, up from the "nicely above $500m" it had guided to before, citing sustained demand for AI infrastructure and faster-than-expected progress ramping up capacity. The revision runs into next year too. STMicro said data-centre revenue could double again in 2027, against earlier guidance of "well above $1bn", which puts the 2027 figure on a steeper path than the company had previously been willing to forecast. The update is a guidance raise rather than a results announcement, the kind of mid-year recalibration that signals order books filling ahead of plan. Behind the numbers is a named anchor customer. STMicro is leaning on a multi-year deal with Amazon Web Services, described as worth multiple billions of dollars, to build out its data-centre business across power conversion, silicon photonics and high-performance computing. Those three areas are the unglamorous plumbing of an AI data centre, the parts that move power and light around rather than the accelerators that get the headlines, and they are where STMicro is positioning its portfolio. The raise lands the company on the right side of a spending wave that has been kind to component suppliers. The hyperscalers are pouring capital into AI compute, and that spending has to pass through a long chain of suppliers before it reaches a finished data centre. STMicro's power and photonics products sit on that chain, and the upgraded forecast is the company's read on how much of the build-out it can convert into revenue. STMicro is better known for the chips that go into cars and industrial equipment, markets that have been soft, which makes the data-centre line one of the brighter parts of its mix even as it remains a modest share of overall revenue. The company runs at a scale where $1bn from data centres is meaningful but not yet dominant, which is part of why the trajectory, rather than the absolute figure, is what it chose to emphasise. STMicro framed the upgrade as a function of both demand and supply, pairing the AI-infrastructure pull with what it called recent progress on capacity ramp-up, the suggestion being that it can now make and ship more of what its customers want than it previously expected to. What the company did not detail is the margin profile of the data-centre business, or how much of the 2026 and 2027 revenue is already under contract versus forecast. Those specifics would normally surface at the next quarterly results. For now, STMicro has told the market to expect more from data centres than it said a few months ago, and named the customer doing much of the lifting.

STMicro lifts data centre revenue goals on AI demand, shares hit 25-year high

The Franco-Italian chipmaker's shares rose as much as 10% ⁠to €65.21 ⁠per share, their highest since September 2000. They were up 8.4% as of 0738 GMT, among top gainers on Europe's benchmark STOXX 600 index. STMicroelectronics raised the 2026 and 2027 revenue targets for its data centre business on Tuesday, citing continued strong demand tied to AI infrastructure and progress in expanding capacity. The Franco-Italian chipmaker's shares rose as much as 10% ⁠to €65.21 ⁠per share, their highest since September 2000. They were up 8.4% as of 0738 GMT, among top gainers on Europe's benchmark STOXX 600 index. STMicro now expects data centre revenue of about $1 billion in 2026, compared with its previous forecast for revenue "nicely above" $500 ⁠million. "Assuming the current dynamic continues and with the current engagements we have, revenues could double ⁠in 2027," it said in a statement, having previously targeted revenue "well above $1 billion" for next year. Jefferies analysts estimated that data centres alone would contribute around 7% growth to 2027 revenue, out of their overall 20.5% growth forecast. STMicro's data centre exposure is focused less on the graphics processors that train AI models and more on the surrounding infrastructure needed to power and manage them. The ⁠company said the higher revenue target also reflected progress in factory ramping capacity. "The new guidance on AI likely results in estimates rising in both years though we would think that estimates will rise more in 2027 than in 2026," J.P. Morgan analysts said in a note.