STMicro Raises AI Data-Centre Outlook as Q3 Profit Nearly Doubles

STMicroelectronics reported third-quarter results on 29 October and raised its full-year outlook for AI data-centre revenue, saying demand from data centres and low-Earth-orbit satellite operators helped it beat market expectations.

Third-quarter figures

Operating income excluding one-off items nearly doubled to $429 million, above the $400.5 million expected by analysts polled by LSEG. Third-quarter revenue was $3.76 billion, and gross margin rose to 37.3% from 33.2% a year earlier.

AI data centres drive demand

The company now expects about $1.3 billion in AI data-centre revenue in 2026, up from a July forecast of more than $1 billion, and reiterated its 2027 goal of well above $2 billion. CEO Jean-Marc Chery told analysts demand was driven mainly by silicon photonics chips, which use light rather than electrical signals to move data between servers.

Outlook and pricing

STMicro forecast fourth-quarter revenue of about $4.15 billion, give or take 3.5%, above analysts' estimate of $4.10 billion, with gross margin expected at about 39%. CFO Lorenzo Grandi said the company is raising prices on selected products as supply stays tight and input costs rise, and prices could be stable or slightly higher next year. “In an environment where demand remains well above supply, we continue to expand capacity,” Chery said in the earnings statement.

STMicro makes chips for cars, factories and smartphones. The company said higher sales of communication equipment, computer peripherals and personal electronics also drove the beat.