TLDR
- STMicroelectronics increased its 2026 data-center revenue projection to approximately $1 billion from a prior forecast of “nicely above $500 million”
- Management anticipates another doubling of data-center revenue in 2027
- Shares of STM surged 11% Tuesday on the enhanced outlook
- The chipmaker commands a 90% market share in chips designed for SpaceX satellites, a partnership dating back to 2015
- While the stock has soared 168% YTD, DCF analysis suggests shares may be trading 38.6% above intrinsic value
Shares of STMicroelectronics rallied 11% Tuesday after the semiconductor manufacturer unveiled significantly elevated revenue projections for its data-center segment, fueled by accelerating AI infrastructure investments.
The Geneva-based chipmaker has set a new data-center revenue goal of approximately $1 billion for 2026. This represents a substantial upgrade from prior guidance calling for revenues “nicely above $500 million.” Looking ahead to 2027, management projects revenues will double once more — surpassing previous expectations of “well above $1 billion.”
STM was changing hands near €62.82 during recent valuation assessments, marking a remarkable 168% year-to-date gain as of early June 2026.
The automotive semiconductor market, historically a core revenue driver for STMicroelectronics, has experienced weakness for more than twelve months. In response, the company has strategically shifted focus toward power management solutions and optical connectivity products utilized in data-center environments — both critical components in the expanding AI hardware ecosystem.
SpaceX Partnership Provides Additional Upside Potential
STMicroelectronics has supplied semiconductors for SpaceX satellite systems since 2015 and maintains a commanding 90% share in this specialized market. With SpaceX anticipated to launch its initial public offering this month, investors are paying closer attention to this strategic relationship.
The semiconductor firm is also exploring early-stage opportunities in space-based data centers — computing platforms positioned in orbit. Remi El-Ouazzane, who leads the relevant product division at STMicroelectronics, characterized it as “something that we are very much involved with but have not been able to scope properly yet.”
While intriguing, this initiative remains speculative with no concrete revenue projections disclosed.
The analog semiconductor sector experienced broad-based gains Tuesday following STMicroelectronics’ announcement. ON Semiconductor advanced 5.6%, Texas Instruments climbed 2.5%, and Infineon Technologies jumped 5.9% in U.S. market activity.
Valuation Concerns Surface After 168% Rally
Following such an explosive advance, market observers are raising questions about whether shares have outpaced underlying business fundamentals.
Simply Wall St’s discounted cash flow analysis values STMicroelectronics at €45.32 per share — indicating the current price of €62.82 represents a 38.6% premium to that calculated fair value.
The analytical platform assigns STMicro a valuation rating of merely 2 out of 6, placing shares in overvalued territory according to their methodology.
From a price-to-sales perspective, the assessment is less conclusive. STM currently trades at 5.20x sales, positioned above the semiconductor industry median of 4.88x but beneath the peer group mean of 6.34x. Simply Wall St’s proprietary “Fair Ratio” calculation stands at 11.87x — which would actually suggest undervaluation using that particular metric.
Trailing twelve-month free cash flow remains in negative territory at roughly -$702 million, though analyst consensus forecasts a reversal to approximately $967 million in 2026, expanding further to $3.47 billion by 2030.
The stock’s 6.6% appreciation over the trailing week and 28.1% gain across the past month underscore sustained bullish momentum entering the summer season.
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