STMicroelectronics, one of Europe's largest chipmakers, said it is still aiming for at least $18 billion in annual revenue by 2027-2028, after a strong third quarter that saw sales jump 17.9% from a year earlier. The company credited demand from artificial intelligence data centers and low Earth orbit (LEO) satellite communications for the boost.
The results, which cover the three months ended September 30, underscore how the semiconductor industry is being reshaped by two fast-growing areas: the massive computing power needed for AI, and the new wave of satellite networks that beam internet from space.
What's driving the growth?
AI data centers require specialized chips for processing and networking, and STMicroelectronics has been supplying components that go into these systems. Meanwhile, LEO satellites—which orbit closer to Earth than traditional ones—are becoming a major market as companies like SpaceX's Starlink and others build out global internet coverage. These satellites need a range of semiconductors, from power management to radio frequency chips.
The company's revenue growth of 17.9% is a significant acceleration, especially for a firm that has faced headwinds in other parts of its business, such as automotive and industrial chips. STMicroelectronics has been working to balance its portfolio, reducing its reliance on any single end market. The company says its goal is to achieve a more balanced business by 2027-2028, with no single segment dominating.
That ambition is reflected in its revenue target of at least $18 billion, which would represent a substantial increase from its current run rate. For context, the company's annual revenue has been around $16-17 billion in recent years, so hitting $18 billion would mark steady growth.
Why this matters for investors
For everyday investors, STMicroelectronics' update is a signal that the AI boom is not just about a few big tech names. The demand for chips that power AI data centers is spreading across the semiconductor supply chain, benefiting companies that make the less-glamorous but essential components.
LEO satellites are another growth story. As more companies launch constellations of small satellites, the need for reliable, radiation-hardened chips will only increase. STMicroelectronics is positioning itself to be a key supplier in both areas.
The company's reaffirmed revenue target suggests management is confident about the long-term outlook, even as the broader chip industry faces cyclical ups and downs. However, investors should note that the $18 billion goal is for 2027-2028, which is several years away. In the meantime, the company's quarterly results will continue to be influenced by the health of the global economy and demand from its traditional markets.
STMicroelectronics' performance also fits into a wider trend of companies benefiting from AI-related spending. For example, STMicroelectronics recently beat profit forecasts on AI data center demand, and other firms like MTU has raised its revenue outlook as demand for its services booms. While these are different industries, they all point to a global economy that is increasingly driven by technology and infrastructure investment.
What to watch next
Investors will be watching STMicroelectronics' next earnings reports to see if the AI and satellite momentum continues. The company's ability to hit its $18 billion target will depend on how quickly these new markets grow and whether it can maintain its competitive edge.
Another factor is the broader semiconductor cycle. The industry has historically been volatile, with periods of boom and bust. STMicroelectronics' push toward a more balanced business is an attempt to smooth out those swings, but it won't eliminate them entirely.
For now, the company's message is clear: it sees a future where AI and space-based communications are major drivers of chip demand, and it intends to be a leading supplier in both. That's a story that could resonate with investors looking for exposure to these transformative trends.
As always, it's important to remember that past performance is not a guarantee of future results. While STMicroelectronics' current growth is encouraging, the semiconductor industry is competitive and subject to rapid technological change. Investors should consider their own risk tolerance and diversification when evaluating any stock.
