STMicroelectronics Raises Its Data Center Guidance to $1 Billion by 2026, Amid an 89% Drop in Net Income

On June 2, 2026, STMicroelectronics (Franco-Italian, NYSE: STM) raised its data center revenue target to $1 billion for 2026, up from a previous target of over $500 million - nearly doubling the guidance for the current fiscal year. During a Morgan Stanley conference in March 2026, CEO Jean-Marc Chéry projected revenue "well above $1 billion" for 2027, a conditional statement tied to the start of optical cables and the AWS contract. As of the announcement date, no third-party analyst consensus publicly supports this trajectory, as reported by MSN on June 2, 2026.

Downstream Demand Addressed by STMicro Components

The signal arrives in a market where AI infrastructure investment indicators continue to rise. On May 28, 2026, Dell Technologies raised its annual revenue forecast from AI servers to $60 billion, validating the robustness of downstream demand that the Franco-Italian company aims to address through its power management and optical connectivity components. Hyperscale operators are rewriting their specifications around architectures dedicated to accelerated computing, a fundamental shift already observable in site organization (see for further insight, AI, Massive Storage and Sustainability: What Strategy for Data Centers? and A Turnkey Data Center Solution for AI). The question for STMicro is what portion of this downstream investment envelope will ultimately settle on its components, and at what pace. The June 2, 2026 announcement does not specify the expected product mix or the percentage of the 2026 guidance already covered by firm orders as of the announcement date.

Two Contractual Engines, One Technological Start

The guidance relies on three identifiable levers. The first is the partnership with Amazon Web Services, announced on February 9, 2026, as a multi-billion-dollar strategic agreement positioning ST as a supplier of integrated semiconductors for AWS's next-generation computing infrastructure, according to the official release relayed by Yahoo Finance. The second is based on co-development with NVIDIA unveiled on March 17, 2026: ST expanded its 800 VDC power conversion product portfolio with new 12 V and 6 V architectures targeted at AI data centers, as detailed in the ST newsroom release. The company claims a position as a full-fledged supplier in the power distribution chain within accelerated computing bays on this segment. The third lever is the ramp-up of optical cables, which Chéry describes as a boosting effect from the start of this product line (boosting effect from the start of the optical cable, in the original wording). The precise timeline for this ramp-up, as well as the expected margin on each line, are not included in the June 2, 2026 financial communication.

A Pivot Set in a Troubled P&L

The data center pivot unfolds on a weakened income statement. According to STMicroelectronics’ annual results, the group's net income for 2025 was $166 million, down about 89% from the $1.557 billion generated in 2024 - a collapse of the bottom line over a full fiscal year. According to the first quarter 2026 results published on April 29, 2026, GAAP gross margin was 33.8%, below the internal target exceeding 40% that management continues to communicate. In the short term, the ramp-up of the data center segment does not therefore restore consolidated profitability. The competitive benchmark reinforces this perspective: Marvell Technology published on May 27, 2026, its Q1 FY2027 quarterly results with data center revenue of $1.8 billion, or 76% of its total revenue and a 27% year-on-year increase. At this pace, STMicro would reach the equivalent of a Marvell data center quarter in 2027 at best - provided the 2026 guidance is met over four consecutive quarters.

Data Center: STMicro vs. Marvell in 2026

For Marvell, the 76% share and +27% year-on-year growth are based on published results. For STMicro, the $1 billion figure is a raised guidance from over $500 million, not an accounted result.