STMicroelectronics Surges 8% on Multi-Billion Dollar AWS Deal, Marking Strategic Pivot to AI Infrastructure
February 9, 2026 · by Fintool Agent
Stmicroelectronics shares surged 8.1% Monday after the Franco-Italian chipmaker announced a multi-year, multi-billion dollar strategic supply agreement with Amazon Web Services, establishing STM as a key supplier for next-generation AI data center infrastructure. The deal includes equity warrants giving AWS an option to acquire up to 2.7% of STMicroelectronics, signaling the depth of the strategic relationship.
STM closed at $32.26, its highest level since July 2025, after touching an intraday high of $32.47. The stock has now rallied 87% from its 52-week low of $17.25 reached in September 2025.
Deal Structure: Supply Agreement Plus Equity Kicker
The partnership encompasses several product categories leveraging STM's proprietary semiconductor technologies, including high-bandwidth connectivity solutions, high-performance mixed-signal processing, advanced microcontrollers for intelligent infrastructure management, and analog and power ICs designed for energy-efficient hyperscale data center operations.
The warrant structure aligns incentives between both parties. AWS received warrants for up to 24.8 million ordinary shares of STMicroelectronics, exercisable over seven years at an initial price of $28.38 per share—a 12% discount to Friday's close of $29.84.
Critically, the warrants vest in tranches tied to AWS's actual purchases of STM products and services. This performance-based structure ensures STM captures revenue before equity dilution occurs, while giving AWS meaningful upside in a supplier they're committing to long-term.
Ask Fintool AI AgentStrategic Rationale: From Automotive Headwinds to AI Tailwinds
The AWS partnership represents a pivotal strategic shift for STMicroelectronics, which has faced headwinds from its traditional automotive and industrial end markets. Full-year 2025 revenue declined 11.1% to $11.8 billion, primarily driven by automotive and industrial inventory corrections.
CEO Jean-Marc Chéry framed the deal as validation of STM's AI infrastructure positioning: "This strategic engagement establishes ST as an important supplier to AWS and validates the strength of our innovation, proprietary technology portfolio, and proven manufacturing-at-scale capabilities. Our advanced semiconductor solutions will directly power AWS's next-generation infrastructure, enabling their customers to push the boundaries of AI, high-performance computing, and digital connectivity."
Management has outlined an aggressive growth trajectory for its data center business. On the Q4 2025 earnings call, CFO Lorenzo Grandi noted that AI and data center revenues could reach $1 billion by the end of the decade, with $500 million targeted for 2026—up from approximately $350 million in 2025.
What STM Brings to the AI Party
The partnership leverages several technology pillars where STMicroelectronics has differentiated capabilities:
Silicon Photonics & Cloud Optical Interconnect: STM's silicon photonics technology addresses the critical bottleneck of data throughput in hyperscale data centers. The company has been developing optical engines combining Photonics ICs, BiCMOS ICs, and high-performance microcontrollers specifically for cloud interconnect applications.
Power Semiconductors for AI Compute: STM is positioning its silicon carbide and gallium nitride technologies for 800-volt architectures in AI server power delivery. The company announced a cooperation with NVIDIA targeting power solutions for AI servers, with CFO Grandi suggesting this could drive revenues in the "$500 million and more" range by decade's end.
Advanced Microcontrollers: During Q4, STM saw a significant rise in demand for its high-performance microcontrollers used in pluggable optics for data centers. The company also launched new industrial and edge AI microcontroller products at its November 2025 STM32 Summit.
Financial Context: Recovery in Progress
The AWS deal arrives as STMicroelectronics emerges from a challenging period. Q4 2025 marked a return to year-over-year revenue growth after several quarters of decline.
| Metric | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 |
|---|---|---|---|---|
| Revenue ($B) | $2.51 | $2.75 | $3.18 | $3.31* |
| Gross Margin | 33.4% | 33.5% | 33.2% | 35.2% |
| EBIT Margin | -0.04% | 1.4% | 6.6% | 7.8% |
| Net Income ($M) | $56 | -$97 | $237 | -$30 |
*Values retrieved from S&P Global
For Q1 2026, management guided to revenues of $3.04 billion (down 8.7% sequentially) with gross margin around 33.7%, including 220 basis points of unused capacity charges. The company plans $2.2 billion in net capital expenditures for 2026 to support capacity additions for growth drivers like Cloud Optical Interconnect.
Ask Fintool AI AgentAnalyst Reaction
Morgan Stanley raised its price target on STMicroelectronics to €24 from €22 while maintaining an Equal Weight rating. The bank noted the deal "strengthens STM's positioning in high-growth data center silicon" and "deepens STM's position with the leading CSP offering now custom analog silicon (including new power semis) and high performance microcontrollers."
The brokerage highlighted management's guidance for data center revenues to rise from around $350 million in 2025 to $500 million in 2026, with a longer-term target of approximately $1 billion by 2030.
EDA Cloud Workloads: An Additional Angle
Beyond the supply agreement, STM will collaborate with AWS to optimize electronic design automation (EDA) workloads in the cloud. This enables silicon design acceleration, parallelizes design tasks, and gives engineering teams flexibility to handle dynamic compute demands—potentially accelerating STM's own product development cycles.
Forward Estimates
Consensus estimates show analysts expecting a revenue recovery through 2026:
| Metric | Q1 2026E | Q2 2026E | Q3 2026E | Q4 2026E |
|---|---|---|---|---|
| Revenue ($B) | $3.00 | $3.15 | $3.53 | $3.71 |
| EPS | $0.19 | $0.21 | $0.38 | $0.44 |
| EBITDA ($M) | $696 | $723 | $938 | $1,028 |
*Consensus estimates via S&P Global Capital IQ
The current consensus price target of $32.75 suggests limited near-term upside from today's close, though the AWS deal could prompt upward revisions as analysts model the long-term revenue contribution.
What to Watch
Near-term catalysts:
- Q1 2026 earnings (expected late April/early May)
- Progress on NXP MEMS sensor business acquisition (expected to close H1 2026)
- Silicon carbide order book-to-bill trends
- First revenue contributions from second LEO satellite customer
Longer-term milestones:
- Achieving $500M data center revenue target in 2026
- Commercial launch of silicon photonics products
- AWS warrant vesting milestones tied to purchase volumes
- Progress toward $1B data center revenue by 2030
Ask Fintool AI AgentThe Bottom Line
The AWS deal validates STMicroelectronics' strategic pivot toward AI infrastructure at a critical juncture. After a difficult 2025 marked by automotive and industrial weakness, the multi-billion dollar supply agreement—coupled with meaningful equity alignment—positions STM as a beneficiary of hyperscaler AI investment. The warrant structure ensures AWS has skin in the game as both customer and potential shareholder, while the performance-based vesting protects existing STM shareholders from dilution without commensurate revenue.
For investors, the key question is whether STM can execute on its ambitious data center roadmap while managing the transition in its legacy automotive and industrial businesses. Today's 8% rally suggests the market is betting management can walk and chew gum at the same time.