STMicro’s Weak Forecast Eclipses Faster Fourth-Quarter Sales

STMicroelectronics NV forecast third-quarter sales that missed analysts’ expectations, saying that revenue growth will accelerate in the final quarter of the year as more orders come in for its chips serving satellites and data centers.

Third-quarter revenue is set to rise about 16% from a year earlier to $3.7 billion at the midpoint of guidance, the company said in a statement Thursday. That compares to an average analyst estimate of $3.79 billion, according to data compiled by Bloomberg.

“We anticipate a revenue growth acceleration in Q4, mainly driven by our engaged customer programs in AI data centers and LEO satellite communication,” Chief Executive Officer Jean-Marc Chery said in the statement.

The company said revenue will be above $4 billion in the fourth quarter, a gain of more than 20% from a year ago, compared to analysts estimates of about $4.03 billion.

The ongoing AI infrastructure buildout has boosted demand for the many kinds of chips that can be used in data centers, from Nvidia Corp.’s cutting-edge GPUs to STMicro’s semiconductors that support power management and connectivity. That has buoyed the Franco-Italian chipmaker’s business, and Chery has pushed to expand beyond its core consumer electronics and automotive industries into higher growth areas.

STMicro broke out AI-related revenue guidance for the first time in April and nearly doubled its 2026 forecast for the business in June. On Thursday, it raised expectations for AI sales slightly to above $1 billion this year and “well above $2 billion” in 2027. Previously, STMicro expected revenue from its data centers business to reach $1 billion this year and to double next year.

STMicro shares dropped on Tradegate before Paris markets opened. When the company’s share price soared in June, STMicro issued $1.5 billion in convertible bonds that can be exchanged into equity.

There are signs of a broader turnaround for the mature semiconductor industry. Competitor Texas Instruments Inc. gave a sales forecast on Wednesday that topped estimates thanks to industrial, data center and auto demand. However, the US firm’s shares fell in late trading after a 70% gain so far this year.

Read More: STMicro Eyes $1.5 Billion Convertible Bonds After AI-Fueled Jump

STMicro sees gross margin for the current quarter at about 37%, while analysts expect 36.76%.

Power semiconductors such as the ones made by STMicro are in demand as “AI racks are becoming more power-dense,” Bloomberg Intelligence analyst Charles Shum wrote in a note before earnings.

The company signed a deal this year to supply semiconductors to Amazon.com Inc.’s AWS. The contract, which includes chips for power management, will drive growth for the next three-to-five years, Chery said in April.

The data center boom has helped STMicro, which is a supplier to Tesla Inc. and Apple Inc., turn around its business. It has struggled with weak demand in the auto and consumer sectors in recent years as customers worked their way through inventories built up after shortages during the Covid-19 pandemic.