BofA Securities has increased its 12-month price objective for STMicroelectronics to $34.00 from $29.00 but maintained a Neutral rating on the shares. The new target is described by the firm as closely matching InvestingPro's Fair Value assessment, which indicates the stock is reasonably valued at current levels. STMicroelectronics is trading at $32.25, and analyst forecasts for the stock span a range from $28 to $45.
The revision follows STMicroelectronics' expanded contract with Amazon Web Services (AWS). BofA says the deal lends support to STM's target of generating €1 billion in data center revenue before 2030. The bank identifies several product areas as contributors to that goal - silicon photonics, analog, power and microcontroller units.
STMicroelectronics, classified in the Semiconductors & Semiconductor Equipment industry, reported $11.8 billion in revenue over the last twelve months. Analysts polled in the coverage referenced by BofA are projecting 13% revenue growth for fiscal year 2026.
In its updated modelling, BofA now expects total data center and AI-related revenue from STMicroelectronics to be $0.7 billion in 2027 and to reach $1.0 billion in 2028. Silicon photonics is singled out as a meaningful driver within that total, with BofA forecasting $0.3 billion of silicon photonics revenue in 2027 and $0.55 billion in 2028.
The bank also outlined how AWS production is likely to be allocated across STMicroelectronics' manufacturing footprint. BofA anticipates AWS volumes will be processed in the company's 300mm fabs and other facilities, a dynamic the firm says should help absorb under-utilization. At the same time, BofA expects the first quarter of 2026 to include about 220 basis points of charges related to unused capacity.
On profitability and capital spending, BofA has nudged up its 2028 gross margin forecast to 38.3% from 37.5%. The firm has also increased its 2027-2028 capital expenditure expectations to a range of $2.2 billion to $2.3 billion, linking the higher capex to continued investment in silicon photonics and technologies tied to data center demand.
Separately, STMicroelectronics disclosed fourth-quarter 2025 results that contained a notable earnings shortfall. The company reported earnings per share of $0.11, below the $0.28 consensus estimate - a negative surprise quantified at 60.71%. Revenue for the quarter came in at $3.33 billion, narrowly topping the forecasted $3.29 billion. The results offer a mixed signal: top-line resilience alongside a substantial EPS miss.
No other major corporate events such as mergers, or analyst upgrades or downgrades were reported for STMicroelectronics at the time of BofA's update.
Implications for markets and supply chains
The changes in BofA's assumptions - higher data center revenue, increased capex and modestly improved margin expectations - reflect a recalibration toward AI and data center demand for semiconductor suppliers. The near-term embedding of unused capacity charges highlights ongoing utilization pressures in manufacturing capacity planning.