Global efforts to build artificial intelligence (AI) infrastructure are providing sustained momentum for semiconductor demand. In this context, European chipmaker STMicroelectronics NV has raised its data center revenue target for the second time this year, yet its share price has experienced a sharp decline.
The company, whose clientele includes Apple, Elon Musk's Tesla, and SpaceX, indicated that revenue from its data center business should exceed $1 billion this year and surpass $2 billion next year. This represents a significant acceleration from prior guidance targeting approximately $1 billion by 2026 and $2 billion by 2027.
This marks the second upward revision of these forecasts since June, underscoring the rapid pace of demand growth for the chips powering energy-intensive data centers. Like other chip manufacturers, STMicroelectronics is benefiting from the hundreds of billions of dollars in spending commitments by major global technology firms to construct AI infrastructure.
Shares of STMicroelectronics tumbled more than 15% in Milan trading on Thursday. Analysts at Citi noted in a client report that the company's second-quarter results and outlook were broadly in line with average expectations. They added that the stock, having more than doubled since January, had already priced in growth expectations. The analysts stated that without a new catalyst for raising forecasts, the stock could face near-term pressure.
Chief Executive Jean-Marc Chery stated that the sequential revenue growth rate in the second half of the year should exceed the company's typical 15% level, citing data centers and satellites as the primary drivers.
The company aims to capitalize on semiconductor demand from the low-Earth orbit satellite industry, which is expected to see sustained growth in the coming years. These satellites can provide network connectivity to devices in remote areas.
STMicroelectronics anticipates generating over $3 billion in revenue from equipment supplied for space applications between 2026 and 2028. This forecast currently excludes potential benefits from orbital data centers.
For its second fiscal quarter, STMicroelectronics reported a net profit of $222 million, a significant improvement from a loss of $97 million in the same period last year. Gross profit climbed from $926 million to nearly $1.22 billion, with a gross margin of 34.8%. Analyst consensus had forecast a net profit of $209.9 million and gross profit of $1.22 billion.