Bank of America upgrades STMicroelectronics on stronger earnings outlook

Wednesday 10 June 2026 - 11:20

By: Dakir Madiha

Bank of America upgrades STMicroelectronics on stronger earnings outlook

STMicroelectronics shares rose after Bank of America Securities upgraded the Franco-Italian semiconductor group from neutral to buy and raised its price target to 86 euros. The new valuation marks a record level among recent analyst forecasts and reflects renewed confidence in the company’s earnings recovery trajectory. The upgrade also contributed to a positive tone across European equity markets, including gains in major Italian benchmarks during early trading.

The revised target is based on a valuation multiple of 13 times expected EV/EBITDA for 2028. This places the company at the upper end of its historical valuation range while still implying a discount compared with peer semiconductor firms. Analysts cited growing conviction that earnings have passed a cyclical trough after a sharp decline in net profit in the most recent fiscal year, which fell by 89 percent amid weak demand in automotive and industrial markets.

The upgrade represents a significant shift in stance compared with earlier positioning that had only modestly raised the price target while maintaining a neutral rating. The reassessment follows updated company guidance indicating stronger-than-expected growth in data center revenue linked to artificial intelligence infrastructure. The semiconductor manufacturer now expects data center revenue to approach 1 billion dollars by 2026, nearly doubling prior projections.

Investor sentiment has also been supported by improving operational momentum across key segments. The company reported first-quarter revenue of 3.1 billion dollars in 2026, up 23 percent year on year, driven by stronger performance in communications equipment and computing peripherals. Management also signaled that sustained demand from artificial intelligence infrastructure could drive another doubling of data center revenue by 2027, reinforcing expectations of a multi-year growth cycle.

Additional support came from broader pricing actions and sector-wide recovery signals. The company confirmed a second round of price increases for 2026, reflecting continued cost pressures across semiconductor supply chains. Analysts across several institutions have turned more constructive in recent weeks, pointing to improving fundamentals and early signs of demand stabilization after a prolonged downturn.