The AI boom boosted the performance of chip giants, STMicroelectronics NV ADR RegS (STM.US) Q3 revenue guidance increased by 6.2%

STMicroelectronics NV ADR RegS (STM.US) released its performance guidance, benefiting from the boost to the company's business from the demand for artificial intelligence data centers. It is expected that revenue for the current quarter will grow. According to a statement released by the company on Thursday, with the mid-point of the guidance range, revenue for the third quarter is expected to increase by approximately 6.2% compared to the same period last year, reaching $3.7 billion. This number is slightly lower than the analyst average expectation of $3.79 billion. The construction of artificial intelligence infrastructure has driven the increasing demand for various chips in data centers, from NVIDIA Corporation's cutting-edge GPU to STMicroelectronics NV ADR RegS's semiconductor products for power management and connectivity. This trend has injected strong momentum into this joint French-Italian chip manufacturer. CEO Jean-Marc Chery has begun to expand the company's business from traditional consumer electronics and automotive sectors to higher-growth segments. STMicroelectronics NV ADR RegS first disclosed AI-related revenue guidance separately in April this year, and in June nearly doubled its business expectations for 2026. The company slightly raised this year's AI business sales forecast to just over $1 billion, and raised the 2027 target to "significantly above $2 billion." Previously, the company expected data center revenue to reach $1 billion this year, doubling by 2027. As of Wednesday's close, the chip maker's stock price has surged by approximately 160% year-to-date. In June of this year when the stock price soared, the company had announced its plans to raise $1.5 billion through issuing convertible bonds. STMicroelectronics NV ADR RegS anticipates a gross margin of about 37% for the current quarter, while analysts' average expectation is 36.76%. Analyst Charles Shum pointed out in a report before the earnings release that the strong demand for power semiconductors and other products produced by STMicroelectronics NV ADR RegS is due to the continuous increase in "AI rack power density." The company signed a chip supply agreement with Amazon.com, Inc.'s AWS this year, covering power management chips. Chery stated in April that this contract will drive performance growth in the next three to five years. The data center boom has helped this supplier to Tesla, Inc. and Apple Inc. to achieve a business turnaround. In recent years, due to soft demand in the automotive and consumer sectors as customers digest excess inventory post the COVID-19 pandemic, the company had been under pressure, but is now gaining momentum with the help of AI.