STMicroelectronics shares rose nearly 4% on Monday after Barclays upgraded the chipmaker to Equal Weight from Underweight and increased its price target to $65 from $34. The upgrade and target revision reflect growing analyst confidence in the company’s revenue trajectory across multiple end markets.
In a note led by Simon Coles, Barclays said the earlier Underweight rating had been motivated largely by concerns over gross margins - concerns the bank now views as "no longer valid as the revenue outlook continues to improve for STM across a number of areas." The researchers identified several upside risks that could further lift revenue, including potential price increases, stronger-than-expected optical business performance and expanding satellite-related sales.
Barclays said its 2027 revenue estimates for STMicroelectronics are about 6% above consensus. The bank also set out specific segment projections: it models AI-related revenues growing to 2.3 billion in 2027, up from roughly 1 billion in 2026, and expects satellite revenues to rise to 1.3 billion in 2027 from 600 million to 900 million in 2025 and 2026, respectively.
Alongside those medium-term projections, Barclays flagged a modest short-term risk that STMicroelectronics could guide below seasonal levels for the third quarter because of Apple seasonality. Still, the analysts anticipate that the optical business will accelerate materially in the fourth quarter, contributing to above-seasonal growth heading into year-end.
The Barclays note also included a string of notable target and estimate changes across its European technology hardware and Asian semiconductor coverage. Highlights from that wider review included:
- Raising the price target on Taiwan Semiconductor Manufacturing Co (TSMC) to $625 from $470, citing strong demand for advanced logic wafer supply observed during an Asia supply chain trip and describing the foundry as a compelling way to gain AI exposure within Barclays' coverage universe.
- Moving the SK Hynix target to 2,900 from 2,300, a change Barclays said reflects materially higher HBM pricing assumptions for 2027 and drove revenue estimate upgrades of more than 20%.
- Increasing ASML's price target to 2,000 from 1,900 and modeling 52 billion of revenue in 2027 on higher estimates.
- Raising Infineon's target to 90 from 63 amid a more positive view on the industry upcycle.
- Modestly lifting targets for Nokia and Ericsson, moves Barclays said were driven largely by foreign exchange tailwinds rather than any material improvement in underlying demand; both stocks remain underweight in the bank's view.
Barclays framed the package of upgrades as reflecting increased conviction in semiconductor demand dynamics, particularly around AI and memory pricing, while noting that not all changes were driven by fundamental demand improvements - some were influenced by currency effects. The bank's changes point to differentiated expectations across end markets and supply-chain segments, with specific upside scenarios tied to pricing, optical strength and satellite revenue expansion.
Investors should weigh the positive 2027 revenue trajectories Barclays models against the near-term risk that seasonal patterns - notably related to Apple's product cycle - could lead to below-seasonal guidance for Q3. The bank expects that any such lull would be temporary, with acceleration in optical later in the year supporting an above-seasonal recovery in Q4.
Overall, Barclays' revisions underscore a more constructive stance on selected semiconductor and equipment names, while emphasizing that some target lifts reflect currency movements rather than a uniform improvement in demand across all names.