STMicroelectronics raised its 2026 data center revenue target to about $1.3 billion amid demand from data centers and satellite operators; Reuters reported its third-quarter operating income, excluding one-off charges, beat analyst estimates.
The new target compares with a July projection of more than $1 billion. The company kept its 2027 goal well above $2 billion. Chief Executive Jean-Marc Chery told analysts silicon photonics was the main driver of data center demand. The technology transmits data between servers using light.
STMicroelectronics reported third-quarter revenue of $3.76 billion and a gross margin of 37.3%, up from 33.2% a year earlier. Reuters reported that operating income excluding one-off charges reached $429 million, topping the $400.5 million estimate from analysts polled by LSEG.
STMicroelectronics said stronger sales across communications equipment, computer peripherals and personal electronics helped lift results. The company also linked its higher gross margin to a more profitable product mix and lower expenses at underused factories.
For the fourth quarter, STMicroelectronics forecast revenue of $4.15 billion at the midpoint, with a 3.5% range in either direction, and a gross margin of about 39%. The company had already said in July that fourth-quarter revenue would exceed $4 billion.
Chery said STMicroelectronics was adding capacity amid strong demand. He also pointed to data centers and low-Earth-orbit satellite communications as contributors alongside a cyclical recovery. Reuters reported that shares opened 3.7% lower before turning slightly positive by 5:35 a.m. ET (09:35 UTC) on Oct. 29.
