STMicroelectronics’ share price jumped roughly 10–11% last week after a bullish note from Japanese investment bank Mizuho argued that the stock is mis‑priced relative to its earnings trajectory. Analysts point out that STM currently changes hands at about 20× projected earnings, yet on their numbers earnings per share could surge around 123% year‑on‑year in calendar 2026 and a further 71% in 2027 as margins recover and new design wins ramp, especially in AI data‑center power management and silicon photonics. Put together, that leaves the price/earnings‑to‑growth ratio – the classic PEG metric – at roughly 0.3×, which Mizuho flags as unusually attractive for what they frame as an “analog‑heavy” chip play with structural growth drivers.
On a relative basis, the call is just as aggressive. Using the same 2027 estimates, Mizuho notes that Texas Instruments and NXP are expected to grow EPS at about 21% and 19% respectively, but trade on similar or higher earnings multiples, implying PEG ratios comfortably above STM’s. For investors hunting for growth in semis, the message behind the 123% and 71% EPS lines isn’t just that STM’s profit rebound could be sharp coming out of the down‑cycle; it’s that, on these assumptions, the market is charging a lower multiple for each point of earnings growth than it does for some of the sector’s more established U.S. peers.
Strong link to AI data centres
One of Mizuho'smain arguments is that $STM has favorably stacked revenues by industry. Approximately 15 percent of revenue comes directly from equipment for AI-focused data centers, where demand for powerful yet cost-effective power and control chips is growing. Analysts estimate that the value of STMicroelectronics ' components on each new gigawatt of power for these data centers is now approaching $230 million and is set to continue to grow, particularly for new high-voltage server enclosures for Nvidia $NVDA.
In addition, the company announced in March that it was ramping up mass production of its own silicon photonics technology, chips that transmit data inside data centers using light instead of electricity. These components are important for fast optical interconnects between servers and graphics accelerators in artificial intelligence clusters. STMicroelectronics manufactures them on 300-millimeter wafer lines, allowing it to rapidly increase capacity; the company plans to more than quadruple production by 2027, with capacity largely secured by long-term contracts with large customers.
Mizuho says that large cloud operators such as Amazon Web Services $AMZN, and optical module maker Innolight are expected to be among the customers for the silicon photonics. Analysts estimate that if growth is successful, this business could reach annual revenues of around $500 million in 2029.
Other growth pillars: automotive and satellites
In addition to data centers , Mizuho mentions two other interesting segments:
Automotive - although it expects slightly weaker demand for 2026, STMicroelectronics is benefiting from the growth in the number of electronic components in electric cars, especially in China. Each new electric car contains more power electronics, sensors and control chips, increasing the value of supply per car.
Low Earth Orbit (LEO) and Satellite Networks - Mizuho estimates that the market for chips for low earth orbit satellites could reach an annual value of around $1.6 billion by 2029, at an average growth rate of around 20 percent per year. STMicroelectronics already operates in this segment, and analysts expect the accelerating pace of satellite launches to be another source of growth for the company.
Summing up, Mizuho says STMicroelectronics has several well-distributed growth engines - data centers for artificial intelligence, silicon photonics, automotive and the space business - yet it trades on a valuation that doesn't match the pace of expected earnings growth. This is what was behind the sharp rise in the share price following the publication of this analysis.