STMicroelectronics Operating Income Nears $429 Million as Data Center Demand Accelerates
Key Facts
STMicroelectronics reported operating income of $429 million in the third quarter, excluding non-recurring items, above the average analyst estimate of $400.5 million, according to Reuters. The figure nearly doubled from the same period a year earlier. This metric is non-GAAP operating income, not operating income under U.S. GAAP. It topped estimates as the company moves to expand its data center-related business. The quarter’s results are therefore shaped by two distinct sources of demand: a broader recovery in some of its markets and growing data infrastructure needs.
The company said higher sales of telecom equipment, computer peripherals and personal electronics lifted third-quarter revenue. Reuters added that data center demand and manufacturers of low-Earth-orbit satellites supported the broader recovery. In data centers, Chief Executive Jean-Marc Chery told analysts that demand is being driven mainly by the company’s photonics silicon chips. These chips use light instead of electrical signals to transfer data between servers. This application links demand for the company’s products to the expansion of data transmission within computing centers.
The company raised its 2026 data center revenue forecast to about $1.3 billion, from its July forecast of more than $1 billion, according to Reuters. The revision reflects a higher estimate for annual revenue from this business. At the same time, STMicroelectronics kept its 2027 target at well above $2 billion. These figures give data centers a growing weight in the company’s outlook for coming years. In July, the company said fourth-quarter sales would exceed $4 billion, placing that earlier guidance in the context of its subsequent increase to its data center forecast.
Chery said demand remained far above supply and that the company continued to expand production capacity in line with its strategic roadmap. The statement indicates that capacity expansion is a response to the supply-demand gap, rather than a goal separate from the company’s plan. In premarket trading on October 29, the stock edged up to $48.56, a 0.08% gain from its previous close of $48.52, according to Investing.com data. The company’s shares closed at $46.74 on October 30, according to EL7 data. The figures refer to two different dates, and the October 30 closing price does not provide details on the stock’s session high or low.