STMicroelectronics N.V. (STM) saw its U.S.-listed shares climb 5.9% to $59.17 on Friday, following a reaffirmed Buy rating from Berenberg. The analyst maintained a 53-euro price target, citing renewed momentum from artificial intelligence and satellite connectivity chip sales. The gain brought the European semiconductor maker back into focus after a volatile period for the sector.
The rally reflects growing investor interest in ST's expanding role beyond its traditional automotive and industrial chip markets. Berenberg analyst Tammy Qiu noted that analog chip producers like ST and Infineon are gaining traction this year as AI-linked demand accelerates. She highlighted that ST's growth engines are increasingly coming from outside its legacy segments, particularly in data centers and space applications.
ST's first-quarter results supported this narrative. The company reported revenue of $3.10 billion, with a gross margin of 33.8%. For the second quarter, management guided for revenue of approximately $3.45 billion at the midpoint. CEO Jean-Marc Chery cited improving demand, strong bookings, and distributor inventory returning to normal levels. He also flagged AI-driven projects and data-center sales, projecting more than $500 million in 2026, rising to well over $1 billion by 2027.
Morningstar raised its fair-value estimate for STMicroelectronics to $46 from $31 in a May 8 note, reflecting the AI and low-Earth orbit (LEO) satellite chip thesis. However, that estimate remains below the stock's recent closing price.
Space chip sales are becoming a significant growth driver. ST aims to generate more than $3 billion in total revenue from its space semiconductor segment between 2026 and 2028, largely fueled by demand for chips powering LEO satellite networks. Unlike older geostationary satellites, LEOs operate closer to Earth, reducing broadband signal latency. According to Reuters, ST's LEO revenue jumped to roughly $600 million in 2025 from $175 million in 2021 and is on track to approach $1 billion in 2026. Executive Remi El-Ouazzane described the market as still in its early innings.
The competitive landscape remains largely European-focused. Berenberg also left its Buy rating intact on Infineon and raised its price target, describing Infineon's 2027 AI revenue target as conservative. For ST, the comparison is not with Nvidia-type processors but with chips that manage power, sensors, and signal flow in data centers, vehicles, and industrial equipment.
Despite the positive sentiment, analysts have trimmed their earnings expectations. Simply Wall St notes that while 19 analysts maintain a $14.1 billion revenue target for 2026, they have cut the EPS outlook to $1.05 from $1.18. Friday's uptick leaves little room for error if AI or satellite revenue takes longer to materialize, and any renewed weakness in automotive or industrial markets could weigh on the stock.
Execution remains key. Investors are watching second-quarter sales for signs of improved factory utilization and lower costs from idle capacity. The AI and space narrative must translate into tangible operating leverage to sustain the rally. For now, the market is focusing on ST's shifting product mix, betting that its exposure to satellites, AI infrastructure, and the associated power chain will drive future growth.
