STMicroelectronics projected robust sales growth for the year as the build-out of data centers to power artificial-intelligence models and the deployment of satellites to provide connectivity services fuel demand for semiconductors.
The European chip maker, which counts Apple and Elon Musk's Tesla and SpaceX among its clients, said 2026 revenue should grow nearly 23% on year to roughly $14.5 billion. Meanwhile, its gross margin--a closely watched measure of pricing power--should increase to about 36.4% from 33.9% last year.
The company had refrained from providing detailed annual guidance until now , as it embarks on the final quarter, gaining better visibility into what is driving demand. It expects sales of about $4.15 billion this quarter compared with $3.33 billion a year earlier, above a Visible Alpha forecast of nearly $4.12 billion. Its annual sales projection is also above a Visible Alpha forecast of $14.41 billion.
Chief Executive Jean-Marc Chery singled out data centers and satellites as key drivers for growth this year. Like other chip makers, STMicroelectronics is reaping the benefits of hundreds of billions of dollars in spending commitments from some of the world's largest tech groups to build out AI infrastructure. STMicroelectronics stock has nearly doubled in value since the year began, riding a wave of investor fervor around AI that lifted global semiconductor stocks.
In a sign of how fast demand for chips to power energy-intensive data centers is building up, STMicroelectronics in July projected revenue from data centers above $1 billion in 2026 and well above $2 billion in 2027 compared with prior guidance of about $1 billion and roughly $2 billion, respectively. That marked the second time the company raised its AI forecasts this year.
Alongside data centers, space also provides a key revenue stream for STMicroelectronics and other chip makers that supply semiconductors for low-Earth-orbit satellite constellations. The company expects well above $3 billion in revenue between 2026 and 2028 for the supply of equipment to be used in space, a forecast that for now excludes potential benefits from orbital data centers.
Low Earth-orbit satellite networks are closer to Earth than traditional constellations, making them ideal to beam low-latency broadband directly to smartphones in parts of the world where cell towers are unavailable. SpaceX's Starlink provides direct-to-device connectivity to users in several countries, including Ukraine, where damage to terrestrial networks because of the war is common.
STMicroelectronics had long relied on the automotive industry to generate a significant portion of its sales. Data centers and satellites have allowed the group to diversify its revenue streams and become less tied to carmakers. The auto industry in recent years had slowly been digesting chip inventories it built at the height of the pandemic, weighing on demand for new orders in a blow to STMicroelectronics.
Sales for the quarter that closed Sept. 26 grew nearly 18% on year to $3.76 billion, above company guidance of about $3.70 billion and an analysts' forecast of $3.73 billion, according to Visible Alpha.
The group posted a net profit of $291 million compared with $237 million a year earlier. Its gross profit increased to $1.40 billion from $1.06 billion, generating a 37.3% gross margin. Analysts had forecast $343 million in net profit and $1.38 billion in gross profit, according to Visible Alpha.
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