STMicroelectronics raised its 2026 AI data centre revenue forecast to about $1.3 billion on 29 October, from more than $1 billion projected in July, alongside third-quarter earnings that beat analyst expectations, Reuters reported. The Franco-Italian chipmaker also reiterated its goal of data centre revenue well above $2 billion in 2027.
Key points
- Third-quarter operating income excluding one-off charges was $429 million, above the $400.5 million expected by analysts polled by LSEG.
- Chief executive Jean-Marc Chery identified silicon photonics chips as the main driver of data centre demand.
- STMicro forecast fourth-quarter revenue of $4.15 billion, give or take 3.5 per cent, compared with $3.76 billion in the third quarter.
- The company expects fourth-quarter gross margin of about 39 per cent, following 37.3 per cent in the third quarter.
Silicon photonics drives STMicro’s revised outlook
Chery told analysts that silicon photonics chips accounted for most of the demand behind the data centre forecast. The chips use light in place of electrical signals to carry data between servers. The revised 2026 figure follows the company’s July projection of more than $1 billion, while its goal for 2027 remains well above $2 billion.
STMicro also makes microcontrollers, sensors and power semiconductors used in cars, factories and smartphones. Chery said demand linked to data centres and low-Earth-orbit satellite communications was adding to a cyclical recovery. Those company-specific sources of demand accompanied higher sales of communication equipment, computer peripherals and personal electronics, which STMicro said drove its stronger third-quarter performance.
The data centre revision concerns a specific end market within that wider chip business. Chery attributed the main part of its demand to silicon photonics, while the company also reported stronger sales across other electronics categories. STMicro maintained its 2027 data centre goal when it raised the forecast for 2026.
Third-quarter profit beats LSEG analysts’ estimate
Operating income excluding one-off charges reached $429 million in the third quarter, nearly twice its level a year earlier. Analysts polled by LSEG had expected $400.5 million. Demand from data centres and satellite operators helped the chipmaker exceed market expectations for the quarter, Reuters reported.
Gross margin rose to 37.3 per cent from 33.2 per cent a year earlier. A greater proportion of sales came from more profitable chips, and costs associated with unused factory capacity declined. Both factors contributed to the improvement reported for the quarter.
STMicro expects gross margin to reach about 39 per cent in the fourth quarter. Its earnings outlook follows the third-quarter rise in margin as well as the increase in operating income excluding one-off charges. The company’s sales forecast for the final quarter is higher than the revenue it recorded in the third.
STMicro guides to $4.15 billion in fourth-quarter sales
STMicro forecast fourth-quarter revenue of $4.15 billion, give or take 3.5 per cent, against third-quarter revenue of $3.76 billion. Analysts had expected $4.10 billion for the fourth quarter. In July, the company had already projected sales of more than $4 billion for the period.
Chery said in the earnings statement that demand remained well above supply and that STMicro continued to expand capacity. The company’s revised data centre forecast and its fourth-quarter sales guidance both accompany that expansion, while its gross-margin forecast calls for a further increase from the third-quarter level.
STMicro shares opened 3.7 per cent lower on 29 October before recovering to trade slightly higher by 0935 GMT.
