STMicroelectronics raised its forecast for AI data centre revenue on Thursday after demand from data centres and satellite operators helped the Franco-Italian chipmaker beat market expectations for third-quarter earnings. The company now expects about 1.3 billion dollars in data centre revenue in 2026, up from a July forecast of more than 1 billion dollars, and it reiterated its 2027 goal of well above 2 billion dollars.
Chief executive Jean-Marc Chery told analysts that demand was driven mainly by STMicro's silicon photonics chips, which use light rather than electrical signals to move data between servers. That matters because moving data inside an AI data centre has become as important as computing it: as clusters grow, electrical interconnects consume more power and struggle to keep thousands of accelerators fed. Optical approaches promise higher bandwidth with lower energy per bit, and STMicro's results suggest hyperscale operators are now buying them at volume.
The numbers behind the raise were solid rather than spectacular, which makes the guidance more credible. Quarterly operating income excluding one-off charges nearly doubled to 429 million dollars, beating the 400.5 million dollars expected by analysts polled by LSEG. Third-quarter revenue was 3.76 billion dollars. For the fourth quarter, STMicro forecast revenue of 4.15 billion dollars, give or take 3.5 percent, above the analyst estimate of 4.10 billion dollars and up from the outlook in July, when the company said sales would top 4 billion dollars in the final quarter.
Profitability is improving alongside sales. Gross margin rose to 37.3 percent from 33.2 percent a year earlier, helped by sales of more profitable chips and less idle factory capacity, and the company expects margin to reach about 39 percent in the fourth quarter. The company said higher sales of communication equipment, computer peripherals and personal electronics drove the beat, while demand from data centres and low-Earth-orbit satellite manufacturers added to a broader cyclical recovery across its automotive, factory and smartphone businesses.
Supply remains the constraint. "In an environment where demand remains well above supply, we continue to expand capacity," Chery said in the earnings statement. With supply tight and input costs rising, chief financial officer Lorenzo Grandi said STMicro is raising prices on selected products and could see stable or slightly higher prices next year. Chery also said the company is planning the supply of its equipment, materials and chemicals three to four years ahead, as a push for sovereign supply chains free of dependence on China, Taiwan or the United States makes sourcing more complex.
Asked whether heavy AI spending was sustainable, Chery told journalists that STMicro's data centre business was "much more related to the top five hyperscalers than the neo-cloud business," referring to smaller AI cloud providers whose debt levels have drawn scrutiny. That distinction is the key risk and the key strength in the story: orders are tied to a small number of very large, well-funded buyers rather than to leveraged newcomers, but a slowdown by even one of those buyers would be felt quickly. For now, STMicro is positioning silicon photonics as a durable, multi-year business rather than a one-quarter spike.