AI demand exploding growth! STMicroelectronics NV ADR RegS (STM.US) hits record high before market opening: revenue guidance doubled, expansion may be finalized by the end of the year.

On Tuesday, STMicroelectronics NV ADR RegS (STM.US) dropped a double-bombshell on AI: not only significantly raising the full-year revenue target for its data center business to $1 billion (almost doubling its previous guidance), but its CEO also revealed that the company is highly likely to finalize a new round of expansion plans for its chip factory in Crolles, France by the end of the year. The expansion of the 12-inch wafer fab is basically a done deal, aiming for a new blue ocean in "near-package optics". STMicroelectronics NV ADR RegS CEO Jean-Marc Chery stated at an industry conference hosted by BNP Paribas in Geneva, Switzerland, that as the demand for Silicon Photonics technology in AI data centers is accelerating, the industry roadmap is gradually evolving towards "near-package optics" closely integrated with processors. Chery admitted that the expanding product demand is driving new capacity requirements: "We need to make a decision on additional expansion plans for the Crolles plant between now and the end of this year. This is highly likely to be what we are going to do." Currently, STMicroelectronics NV ADR RegS is using its 300mm (12-inch) wafer fab as the main production base for Silicon Photonics. Chery revealed that while the current infrastructure of the plant is sufficient to support business operations smoothly until early 2028, the landing of near-package optics technology will completely open up potential market space. In the next three years, the company's own capacity will not limit chip production, but it will need to closely monitor the "chip packaging" supply chain situation of subcontractors. Rare "doubling" of data center revenue target, with the potential to double again in 2027 Just a few hours before the expansion statement, STMicroelectronics NV ADR RegS had just announced in a statement that, with strong demand driven by AI infrastructure, it is currently expected that data center business revenue in 2026 will reach around $1 billion, almost doubling from the previous "far higher than $500 million" guidance. STMicroelectronics NV ADR RegS emphasized that this is the second time the company has raised expectations for AI-related business in the past three months. The company's management stated: "Assuming the current growth momentum continues and based on the business cooperation we have already locked in, revenue is expected to double again in 2027." Company executive Remi El-Ouazzane displayed strong ambitions: "We will be a high-growth story in this market. The company has just entered the race this year and has already captured 5% market share, with the target of 30% market share now within reach. We are well aware of the business cooperation needed to achieve this goal, and we have the support of the world's top large-scale cloud providers (Note: referring to strategic cooperation with Amazon.com, Inc. AWS)." Playing the "skeleton and blood" of AI servers, Wall Street institutions intensify their bullish ratings Unlike NVIDIA Corporation GPUs focused on training AI models, the layout of STMicroelectronics NV ADR RegS in the data center field focuses more on providing power supply and operation management for these high-end GPUs, which are metaphorically referred to as the "skeleton and blood" of data centersinvolving power semiconductors for AI server power management, photonics integrated circuits needed for optical networks (such as the jointly developed and mass-produced PIC100 silicon photonics platform), and microcontrollers needed for intelligent management. This explosive growth has attracted many Wall Street institutions to raise their target prices and ratings intensively. Morgan Stanley: Upgraded STMicroelectronics NV ADR RegS rating from "hold" to "buy", with a target price raised from 24 euros to 36 euros (optimistically set at 53 euros). Morgan Stanley expects data center-related revenue to grow at a compound annual growth rate of up to 108% from 2025 to 2028. Haitong Securities: Rated STMicroelectronics NV ADR RegS as "outperforming the market", with the target price raised by 21.4% to $68. Analysts pointed out that analog chips are benefiting from the accelerated deployment of AI servers, and supply shortages are expected to continue until the first half of 2027. Bank of America Corp: Raised the target price from 32 euros/$38 to 35 euros/$41, but maintained a "neutral" rating. The reason is the improvement in growth prospects and the expansion of AI cycle exposure. UBS Group AG: Raised the target price to 49 euros. UBS Group AG stated that the company achieved the largest performance beat in nearly three years in the first quarter, indicating that the industry's cyclical recovery may have begun. STMicroelectronics NV ADR RegS stock price has been rising steadily recently, hitting a 52-week high of $71.07 on May 26th, and had already surpassed this high point in pre-market trading on Tuesday, with the stock rising by 10.19% to $76.05 as of writing.