STMicroelectronics increases its revenue forecast for data centers to $1 billion.

      STMicroelectronics has nearly doubled its revenue expectations from data centres for this year. The Franco-Italian chip manufacturer announced on Monday that it now forecasts about $1 billion in data-centre revenue for 2026, up from a prior estimate of "nicely above $500 million," attributing the increase to ongoing demand for AI infrastructure and quicker-than-anticipated capacity expansion.

      This revision also extends to next year. STMicro indicated that data-centre revenue could double again in 2027, compared to earlier guidance of "well above $1 billion," suggesting a steeper growth trajectory than the company had previously anticipated. The update serves as a guidance increase rather than a results announcement, reflecting a mid-year recalibration that indicates order books are filling faster than expected.

      A key factor behind these numbers is a significant customer. STMicro is relying on a multi-year contract with Amazon Web Services, valued at multiple billions of dollars, to expand its data-centre operations in areas such as power conversion, silicon photonics, and high-performance computing.

      These three domains represent the fundamental infrastructure of an AI data centre, focusing on the essential functions that manage power and light, rather than the more well-known accelerators. STMicro is establishing its portfolio in these areas.

      The revised forecast places the company in a favorable position within a spending trend that has benefited component suppliers. Hyperscalers are investing heavily in AI computing, and this expenditure must flow through a lengthy chain of suppliers before culminating in a completed data centre. STMicro's power and photonics products are integral to this chain, and the updated forecast reflects the company's assessment of how much of this expansion can be converted into revenue.

      While STMicro is more recognized for its chips used in the automotive and industrial sectors—markets that have shown some softness—the data-centre segment represents a brighter aspect of its revenue mix, despite still being a modest portion overall.

      At its current scale, $1 billion from data centres is significant but not yet a dominant revenue stream, which is why the company has chosen to highlight the growth trajectory rather than just the absolute figure.

      STMicro positioned this upgrade as a result of both rising demand and enhanced supply capabilities, indicating that it can now produce and deliver more of what its customers require than initially expected.

      However, the company did not provide details about the profit margins for the data-centre business or the proportion of the projected 2026 and 2027 revenue that is already contracted versus merely forecasted. Such details are typically disclosed in the next quarterly results.

      For now, STMicro has informed the market to anticipate greater contributions from data centres than it communicated a few months ago and identified the customer that is significantly supporting this growth.