STMicro rides AWS AI data center deal to 6.5% share price gain

Amazon Web Services, Inc. (AWS), a subsidiary of Amazon that provides on-demand cloud computing platforms and APIs to its users, has deepened its collaboration with STMicroelectronics, a leading European multinational semiconductor manufacturer, driving a 6.5% surge in STMicro’s stock.

The agreement aims to secure advanced semiconductor technologies to support AWS’s data center operations.

The development comes after AWS announced that it holds warrants that entitle it to purchase up to 24.8 million of STMicro’s ordinary shares. Reports indicate that these warrants will be rolled out incrementally in connection with STMicro’s product payments.

Therefore, under this agreement, AWS may exercise the warrants in one or more transactions over a 7-year period at an initial price of $28.38 per share. Notably, this deal represents AWS’s second investment in a semiconductor firm.

In exchange, STMicro will provide AWS with a range of semiconductor products, including chips that enhance high-bandwidth connectivity and improve energy efficiency for large-scale data centers. The company announced the agreement publicly on Monday, February 9.

Industry analysts say the deal is part of a broader trend in which cloud providers secure deeper ties with specialized chip makers to support accelerated AI compute capacity and data throughput in modern data centre networks.

Semiconductor firms experience increased demand for their products amid the AI boom era 

The global explosion of AI data centers is fueling massive opportunities for semiconductor companies. Firms such as Nvidia Corp., Advanced Micro Devices Inc., and Taiwan Semiconductor Manufacturing Co. Ltd., which design and manufacture cutting-edge AI chips, have secured dominance in this growth.

On the other hand, reports from reliable sources indicate that older analog chipmakers are also facing surging demand for AI data center applications, including power management, sensors, and cooling systems. 

To support this claim, these sources pointed out an example of German company Infineon Technologies AG, which projected an earnings of €2.5 billion or rather $3 billion specifically from sales related to AI by its 2027 fiscal year. The projected rise represents a tenfold increase within three years.

Moreover, STMicro, formed in 1987 by the merger of French and Italian government-owned chip manufacturers, recently released its first-quarter revenue forecast, which exceeded analysts’ expectations. Consumer electronics showed promising signs of demand recovery late last year, following a sustained period of low demand.

Even so, the firm reported a decline in its stock just after reports highlighted divergent recovery paths across different markets. Responding to this finding, Jean-Marc Chéry, the President of the Managing Board and Chief Executive Officer of STMicroelectronics, contended that the automotive market has not yet stabilized. 

STMicro projects 2026 as a transformative year for its revenue performance

STMicro’s higher-than-expected first-quarter revenue forecast comes amid warnings that restructuring expenses will continue following a $141 million fourth-quarter loss. Shares jumped as much as 5% in early trading and were up 2.2% by 1115 GMT.

During an investor call, Chéry stated, “We are starting 2026 with clearer expectations compared to how we began 2025, as the inventory correction in distribution is gradually improving.”

However, analysts pointed to an earlier incident whereby STMicro’s key markets, which consist of automotive, industrial, and consumer electronics, cooled as demand normalized, leading to increased inventory levels and a reduction in customer orders. It is worth noting that this situation took place after the pandemic.

Due to this decline, the company’s net income reached $125 million for the fourth quarter. This figure fell short of the projected $222 million and dropped below last year’s $369 million. Analysts attributed the impairment charge as the main reason for the drop, arguing that it reduced net income to $125 million from its potential of $266 million.

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