France and Italy — STMicroelectronics Profit Nearly Doubles as AI and Satellite Demand Boost Recovery
STMicroelectronics reported third-quarter operating income above market expectations on Thursday, as demand for semiconductors used in artificial intelligence infrastructure and satellite communications helped strengthen the Franco-Italian chipmaker’s recovery.
The company posted operating income of $429 million, excluding one-off charges, nearly twice the amount recorded a year earlier. The result also surpassed the $400.5 million forecast by analysts surveyed by LSEG.
For the fourth quarter, STMicroelectronics projected revenue of $4.15 billion, plus or minus 3.5%. The forecast is higher than its third-quarter sales of $3.76 billion and above the analyst consensus of $4.10 billion.
Chief Executive Jean-Marc Chery said demand continued to exceed supply, adding that the company was increasing production capacity in accordance with its strategic plans.
STMicroelectronics produces various semiconductor components, including microcontrollers, sensors and power semiconductors used in automobiles, industrial equipment and smartphones. Stronger sales of communications equipment, computer peripherals and personal electronics also contributed to its better-than-expected performance.
Demand from emerging technology markets is providing additional support for the company’s recovery. AI data centers require extensive computing infrastructure, while low-Earth-orbit satellite operators are generating further demand for components used in communications systems.
These applications are adding to an improvement across the broader semiconductor industry’s business cycle, giving chipmakers additional opportunities to expand sales.
The company also recorded an improvement in profitability during the third quarter. Its gross margin climbed to 37.3%, compared with 33.2% in the same period a year earlier. STMicroelectronics attributed the increase to a higher proportion of sales from more profitable chips and reduced costs related to unused factory capacity.
For the fourth quarter, the company expects its gross margin to reach approximately 39%.
Analysts at Jefferies expect the growth momentum to extend into 2027. They project that STMicroelectronics’ data center revenue will roughly double between this year and next year, while identifying further potential for margin gains toward the end of 2027.
The outlook underscores the growing contribution of AI infrastructure and satellite communications to semiconductor demand, complementing established markets such as consumer electronics and industrial equipment.
Nevertheless, the company’s forecast remains subject to its stated guidance range and broader market conditions. The relationship between customer demand, manufacturing capacity and product profitability will remain central to its performance as the semiconductor industry continues to recover.
For investors, the latest results signal stronger operating performance. Higher expected revenue and improving margins provide additional support for the company’s near-term outlook.
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