STMicroelectronics (ST) closed at €62.82 on Euronext Paris Friday, paring a sharp weekly advance that had pushed shares to their highest level since the dot-com era. The stock finished the week up 6.6%, driven by an updated 2026 data-center revenue target of roughly $1 billion, but profit-taking and a broader semiconductor sell-off triggered by Broadcom's cautious outlook erased nearly 6% of its value in the final session.
The chipmaker's rally began Tuesday when management raised its data-center revenue forecast from "nicely above $500 million" to $1 billion, with potential for that figure to double by 2027 if demand and customer activity remain robust. Shares surged as much as 15.1% that day, reaching €68.26, a level not seen since September 2000. The move also lifted peers Infineon and Schneider Electric, as AI-related stocks across Europe gained momentum.
Friday's decline reflected a combination of profit-taking and a drag from the U.S. chip sector, after Broadcom cut its guidance and weighed on global semiconductor sentiment. The STOXX 600 slipped 0.3% on the day and ended the week down 0.5%, while European tech shares dropped 2.9% following a two-month run that had added roughly 30%.
STMicroelectronics is increasingly viewed as one of Europe's cleaner plays on AI infrastructure, not through GPU chips, but via products for servers, power management, and optical links inside data centers. Executive Remi El-Ouazzane said the company aims to capture a growing share of that market, starting from 5% and targeting 30%—a push supported by a strategic partnership with Amazon Web Services.
CEO Jean-Marc Chery signaled that the company will likely decide by year-end on expanding capacity at its Crolles, France, site, as demand for silicon photonics—technology that uses light to accelerate data transmission between chips and servers—continues to rise. "This is most likely what we will do," Chery said regarding the potential expansion.
Looking ahead, the ECB's interest rate decision on June 11 is a key catalyst for the stock. A Reuters poll shows 74 of 80 economists expect a 25-basis-point hike to 2.25%, a move that could pressure growth-sensitive tech names. Bas van Geffen, senior macro strategist at Rabobank, noted that the ECB is wary of underestimating inflation again, and the cost to credibility from holding rates steady could outweigh the risks of a hike.
STMicroelectronics shares are sensitive to changes in bond yields and discount rates, as chip stocks are typically considered rate-sensitive. The rally also faces risks from potential drops in AI infrastructure orders, subcontractor bottlenecks, or higher rates pushing investors out of expensive growth stocks. The company itself flagged that demand could fall short of estimates and that third-party component issues might delay new program launches.
Despite Friday's pullback, the stock's weekly performance underscores investor optimism about STMicroelectronics' pivot toward AI-driven data-center demand. With a product mix spanning automotive, analog, sensors, power, and microcontrollers, the company is positioning itself to capture a larger slice of the AI infrastructure buildout—but near-term direction hinges on the ECB's rate path and sustained demand from cloud providers.
