St. Louis runs after new agreement with Amazon Web Services

(Il Sole 24 Ore Radiocor) - Stmicroelectronics in evidence at Piazza Affari, boosted both by the news of the extension of the agreement with Amazon, and by the positive mood on tech, after the strong recovery recorded last Friday by the Nasdaq, up more than 2%. In detail Stmicroelectronics this morning announced an expansion of its strategic partnership with Amazon Web Services (Aws): in practice, it becomes the strategic supplier of advanced semiconductors for Amazon Web Services' cloud and AI infrastructure. The multi-year, multi-billion dollar deal also includes the issuance of warrants by Stmicroelectronics to Aws to purchase up to 24.8 million shares, exercisable over a seven-year period at an initial exercise price of $28.38, with vesting linked to purchase volumes over time.

The analysts at Intermonte believe that the announcement is positive, considering that Stmicroelectronics will thus take advantage of the strong demand for semiconductors linked to investments in AI. It should be recalled that Amazon in recent days, at the time of the release of its 2025 accounts, had announced an investment forecast for this year of no less than USD 200 billion, up from USD 132 billion last year. "Assuming a revenue contribution of 5 billion spread over 7 years (consistent with the "multi-billion" dimension and the time horizon of the warrants), a contribution in terms of ebit margin above the group, we estimate that the impact at the level of ebit/earnings per share could be in the order of the 'high-single digit', i.e. approximately 10%," commented Intermonte analysts, who nevertheless continue to be cautious about Stmicroelectronics' shares, estimating a price target lower than the stock price and equal to 25.03 euros.

More optimistic, however, are the experts at Equita, who have issued a'Buy' on St, with a price target of EUR 30. "The agreement demonstrates the need for hyperscalers to secure supplies in order to effectively realise the significant investment plans announced recently and highlights how competitive the solutions St is developing are," they commented, pointing out that today's announcement also strengthens the relationship with the Amazon group, with which it also collaborates on other fronts. Equita, among others, explained: 'we think that an initial contribution from Aws could arrive as early as 2026, and then grow in subsequent years to an amount that could reach several hundred million dollars annually'. The sim puts the total amount in five years at over USD 2 billion. "We therefore think that the stock, which trades at 15 times the expected price-earnings to 2027, may react positively," considering that it had recently been penalised for its exposure to the automotive sector, they concluded.