The European chipmaker beat its guidance midpoint and raised its full-year outlook as AI data centers and LEO satellites drove a 64% jump in one segment
STMicroelectronics reported third-quarter 2026 net revenues of $3.76 billion on October 29, a 17.9% increase from a year earlier. The result landed above the midpoint of the company’s own forecast.
The headline growth figure is solid. The more interesting number sits inside one segment that grew 64%, powered by two of the hottest buildouts in tech: AI data centers and low Earth orbit satellite networks.
Inside the quarter
The standout was ST’s communication equipment and computer peripherals segment, which the company abbreviates as CECP. Sales there rose 64% year over year.
Two product lines did most of the lifting. One was silicon photonics integrated circuits sold into AI data centers. The other was hardware for LEO satellite programs.
Silicon photonics deserves a quick explainer. Think of it as swapping copper wiring for fiber optics, but at the scale of a chip. Instead of pushing data through electrical signals, these components move it with light.
That matters because AI clusters shuttle enormous volumes of data between processors. Faster, more efficient connections help keep expensive GPUs busy rather than idling while they wait for information.
On the profitability side, ST posted a gross margin of 37.3%. US GAAP operating income came in at $367 million, and net income reached $291 million, or $0.31 per diluted share.
CEO Jean-Marc Chery credited the performance to demand outpacing supply across several market categories.
A bigger outlook for 2026 and beyond
Management used the strong quarter as a reason to lift expectations for the rest of the year. ST now sees full-year 2026 revenue at roughly $14.5 billion at the midpoint, which would mark growth of 22.8% over the prior year.
The AI data center piece of that outlook got its own upgrade. ST now expects about $1.3 billion in revenue from AI data center products for 2026.
Fourth-quarter guidance points to revenue of around $4.15 billion at the midpoint. That would represent a 10.5% sequential increase from Q3.
Margins are expected to improve too. The company is guiding for a fourth-quarter gross margin of approximately 39.0%, up from the 37.3% it just reported.
Looking further out, ST is targeting more than $2 billion in AI data center revenue in 2027.
The customer list helps explain the confidence. ST supplies components tied to these growth areas to companies including SpaceX, Apple, and Tesla.
