Shares in STMicroelectronics NV (EPA:STMPA) jumped more than 6% on Monday after the Franco-Italian semiconductor group announced an expanded strategic collaboration with Amazon Web Services. Investors viewed the move as strengthening STM’s exposure to the rapidly expanding cloud and data centre infrastructure markets.
Under the terms disclosed by the company, the collaboration will make STMicroelectronics a key supplier for AWS’s next-generation compute infrastructure. The scope of the work includes components and technologies across data centre connectivity, cloud-based electronic design automation (EDA) workloads and custom silicon solutions.
As part of the agreement, STMicroelectronics will issue warrants to AWS covering up to 24.8 million ordinary shares. Those warrants are exercisable over a seven-year period at an initial exercise price of $28.38 per share, the company said.
Analysts at Morgan Stanley weighed in on the transaction, saying it strengthens STM’s positioning in high-growth data centre silicon. The brokerage reiterated that STM’s management has identified data centre silicon as a key earnings driver beginning in 2026. Morgan Stanley noted company guidance that data centre revenues are expected to increase from around $350 million in 2025 to $500 million in 2026, with a longer-term target of about $1 billion by 2030.
“Today’s announcement of an expanded collaboration with AWS deepens STM’s position with the leading CSP offering now custom analog silicon (including new power semis) and high performance microcontrollers,” Morgan Stanley said.
The broker also characterized the arrangement as structurally similar to STM’s earlier bespoke collaborations with major customers. In its assessment, the deal is "incrementally positive for both medium term revenue visibility and mix,” and the AWS relationship is expected to become a more material contributor to STMicroelectronics’ data centre business over the coming years.
Market reaction to the announcement was swift, with the company’s shares jumping in early trading on the perceived upgrade to its cloud and data centre end-market exposure. The agreement combines a commercial supply relationship with a financial component in the form of long-dated warrants, aligning long-term customer engagement with potential equity participation.
Context and takeaways
The transaction links product supply for next-generation compute platforms with a warrant issuance to AWS, while market commentary highlights the potential for stepped-up revenue contribution from data centre silicon beginning in 2026 according to company guidance.