STMicroelectronics raises 2026 data center revenue outlook to $1.3 billion

STMicroelectronics said on October 29 it expects about $1.3 billion in 2026 revenue from AI data centers, lifting its forecast as demand from data centers and satellite operators supported third-quarter results. Its July outlook had called for more than $1 billion.

The Franco-Italian chipmaker left its 2027 data center revenue goal unchanged at well above $2 billion. CEO Jean-Marc Chery told analysts that silicon photonics chips accounted for most of the demand. The chips move information between servers through light rather than electrical signals.

Third-quarter operating income, with one-off charges excluded, nearly doubled from a year earlier to $429 million, exceeding the $400.5 million estimate in an LSEG analyst poll. The company said increased sales in communication equipment, computer peripherals and personal electronics helped it outperform expectations.

STMicro projected revenue for the fourth quarter at $4.15 billion, plus or minus 3.5%, against analysts' expectation of $4.10 billion. Third-quarter revenue was $3.76 billion. Chery said the company was expanding capacity while demand continued to exceed supply by a wide margin.

Third-quarter gross margin reached 37.3%, compared with 33.2% a year earlier. STMicro said the improvement reflected a shift toward more profitable chips and lower idle-factory costs. Its fourth-quarter outlook calls for gross margin of about 39%.