STMicroelectronics (STM) made its name selling chips for cars. In results out this week, it credited two other markets for its growth, data centers and satellites. The European chip maker now expects sales this year to grow nearly 23%, to roughly $14.5 billion. Its stock has nearly doubled since January.
Most of the numbers beat. Sales for the third quarter came to $3.76 billion, nearly 18% more than a year ago. The company's own forecast was about $3.70 billion, and analysts had $3.73 billion. For this quarter it's looking for about $4.15 billion, up from $3.33 billion a year earlier. It hadn't given a detailed full-year forecast until now. Gross margin, the share of each sales dollar left after making the product, should reach about 36.4% for 2026. Last year it was 33.9%. Chief Executive Jean-Marc Chery named data centers and satellites as the big drivers, the Journal's Mauro Orru reported.
One line didn't beat. Net profit came in at $291 million. That's up from $237 million a year ago, but analysts wanted $343 million. Gross profit, at $1.40 billion, edged past the $1.38 billion forecast. So the shortfall came further down, after the company's other costs. The paper doesn't say which costs. A sales beat with a profit miss is worth reading twice.
The AI money finds the second row
STMicro counts Apple (AAPL), Tesla (TSLA) and SpaceX among its customers. Its AI forecast has gone up twice this year. The July raise put data-center revenue above $1 billion for 2026 and well above $2 billion for 2027. Before that, it had said about $1 billion and roughly $2 billion. The AI build-out started with Nvidia (NVDA) and the memory makers. Now it's reaching suppliers most people have never heard of.
Our read
This is Investments/Risk · IN04. We don't own STMicro in any model book. Apple is held at weight in 24 books and Tesla in 13; nothing added. The lesson is about the boom, and it cuts two ways. When AI spending reaches the second row of suppliers, the build-out is broad and real. It also means a lot of stocks have doubled on a forecast. STMicro's shares nearly doubled this year as it promised more than $1 billion of data-center sales. That's about 7% of the roughly $14.5 billion it expects in total. A small slice of the business is carrying a big part of the story. We'd rather own the customers than chase the supplier.
Here's where this touches your money. If you own a tech or chip fund, the AI build-out sits inside it, often in names you'd never pick yourself. This week, open that fund's top-ten holdings. For each name, try to say in one plain sentence what it sells. Then pick one that's run up this year and look up how much of its sales really comes from AI. For STMicro, data centers are about 7% of this year's expected sales. If you can't find the answer for a big holding, bring the list to your next review and we'll go through it together. You learn where the gutters drain on a dry day.