STMicroelectronics Refinances Convertibles at Higher Strike, Doubles Data Center Revenue Forecast

STMicroelectronics raises $1.5B in convertible notes, retires prior bonds, and lifts 2026 data center revenue outlook to $1B. Stock dips 2.3% from 52-week high amid mixed analyst reactions.

STMicroelectronics has unveiled a sweeping capital markets operation, issuing $1.5 billion in new convertible notes while simultaneously retiring a prior bond series and sharply lifting its data center revenue guidance. The moves come as the stock pulls back from a fresh 52-week high above €70, with investors weighing the implications of the refinancing against a much brighter outlook for its AI-powered infrastructure business.

The Geneva-based chipmaker is splitting the convertible issuance into two equal tranches. The first, a zero-coupon note maturing in 2031, carries a conversion price of roughly $120 per share. The second, a 0.625% coupon note due 2033, shares the same conversion price. Proceeds will be used to repurchase the company’s outstanding zero-coupon convertible bonds maturing in 2027, which had a conversion price of only about $45. By replacing the old paper with new notes struck nearly three times higher, the company effectively limits future dilution to around 1%, according to analyst estimates. The net effect adds roughly $750 million to the debt stack.

The accompanying update to the data center business delivered the biggest catalyst for the recent rally. STMicro now expects to generate approximately $1 billion in revenue from the segment in 2026, double its prior forecast of “significantly above $500 million”. Management indicated that a further doubling could be possible in 2027 if current demand dynamics persist. The growth is tied to new 12V and 6V power management architectures for 800?VDC supply rails aimed at hyperscalers. STMicro already supplies power solutions to SpaceX and Tesla, reinforcing its position in high-growth niches.

Despite the bullish revenue outlook, shares retreated 2.29% on the day of the announcement to €66.67, following a 52?week high of €70.00 set the previous Sunday. The stock remains up roughly 185% year?to?date. The distance to the 200?day moving average stands at a comfortable 108%.

Adding to the near-term corporate calendar, the ex?dividend date for the first quarterly instalment of the approved annual dividend of $0.36 per share falls on June 22, 2026. Shareholders will receive $0.09 per share, with payment due on June 24. The convertible settlement is scheduled for June 23, after which the company will observe a 90?day lock-up period. Listing on the Frankfurt open market is expected to follow.

On the financial front, STMicro reported first?quarter revenue of $3.095 billion, up 23% year?on?year and ahead of its own guidance. Second?quarter guidance calls for revenue of approximately $3.45 billion, representing sequential growth of 11.6%. The first?quarter gross margin came in at 33.8%, exceeding the company’s internal target but still well below the 40%?plus levels seen during the last cyclical peak. Earnings per share of $0.13 missed analyst expectations of $0.17.

Analyst reactions to the data center pivot and the balance sheet moves have been mixed. Deutsche Bank raised its price target to €75 from €52 and reiterated a buy recommendation after the PCIM industry conference in Nuremberg. Bank of America upgraded the stock to buy and set a new target of €86. Goldman Sachs, however, maintained its hold rating. The divergence highlights the uncertainty around margin recovery and the pace of AI infrastructure buildout.

STMicro will report second?quarter results on July 23. By then, the impact of the data center ramp and the fully subscribed convertible deal should become clearer, offering investors a sharper view on whether the chipmaker can sustain its blistering 2026 rally.