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

STMicroelectronics Raises Data Center Revenue Forecast Amid AI Boom

STMicroelectronics has sharply revised its chipmaker revenue forecast upward, now targeting approximately $1 billion in data center revenue for 2026, nearly double its previous guidance of "nicely above $500 million."1

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The Franco-Italian chipmaker attributed the upgraded forecast to sustained AI demand and faster-than-expected progress in expanding manufacturing capacity.2

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Looking further ahead, the company indicated that revenues could double again in 2027, assuming current market dynamics continue, moving beyond its earlier target of "well above $1 billion" for that year.3

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Market Response and Share Performance

Investors responded enthusiastically to the news, pushing STMicroelectronics shares up as much as 10% to €65.21 per share, marking shares hit 25-year high levels not seen since September 2000.3

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The stock traded up 8.4% as of 0738 GMT, placing it among the top gainers on Europe's benchmark STOXX 600 index. Jefferies analysts estimated that data centers alone would contribute around 7% growth to 2027 revenue, out of their overall 20.5% growth forecast for the company.3

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Amazon Web Services Partnership Drives Growth

Underpinning this aggressive revenue trajectory is a multi-year Amazon Web Services partnership worth multiple billions of dollars, covering power conversion, silicon photonics, and high-performance computing.2

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STMicro executive Remi El-Ouazzane stated the company aims to grow from a 5% market share to 30%, with the backing of "the biggest hyperscaler" providing the path forward.1

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Unlike competitors focused on graphics processors that train AI models, STMicroelectronics concentrates on the surrounding AI infrastructure demand—the essential plumbing that powers and manages data centers.3

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Crolles Fab Expansion Under Consideration

CEO Jean-Marc Chery revealed that the company will likely decide on a Crolles fab expansion by the end of 2026 to meet accelerating demand for silicon photonics used in optical connections within and between data centers.1

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Speaking at a BNP Paribas conference in Geneva, Chery explained that the anticipated shift toward near-package optics, where optical engines sit closer to processors, would require additional capacity decisions. The company has already built infrastructure at its 300-millimeter wafer fabrication plant in Crolles sufficient to support the silicon photonics business through 2026, 2027, and early 2028.1

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Strategic Positioning in AI Infrastructure

For STMicroelectronics, better known for automotive chips and industrial chips that have faced softer markets recently, the data center business represents a bright spot in its portfolio mix.2

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While $1 billion in data center revenue remains meaningful but not yet dominant in the company's overall revenue, the trajectory signals the chipmaker's ability to capture a growing share of hyperscaler spending on AI compute infrastructure. J.P. Morgan analysts noted that the new guidance on AI would likely push estimates higher in both years, with 2027 seeing more significant upward revisions than 2026.3

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Chery emphasized that while STMicro would not be limited by its own manufacturing capacity over the next three years, the company must pay attention to its subcontractors, particularly in packaging.1

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