1 Lesser-Known Chip Stock to Buy ASAP

The global semiconductor industry appears to be experiencing structural tailwinds. Driven by the rise of artificial intelligence (AI) infrastructure, the global semiconductor industry’s annual sales are projected to reach $975 billion in 2026, an all-time high. Furthermore, with sustained growth, annual sales can reach $2 trillion by 2036.

With this in mind, it’s not surprising that semiconductor stocks are up. While some investors may have missed the big rally, it also appears that pockets of opportunity still remain. Amid the volatility, STMicroelectronics (STM) stock is up 43% over the past 52 weeks. This lesser-known chip stock appears to have significant potential.

STMicroelectronics recently announced a partnership with Amazon’s (AMZN) Amazon Web Services (AWS), and this multi-billion dollar collaboration underscores the scope of value creation. As part of the agreement, STM will be a provider of advanced semiconductor technologies and products for AWS. Additionally, STM will issue warrants to AWS for up to 24.8 million shares. In addition to building credibility, this deal is likely to be a top-tier growth driver for STMicroelectronics and STM stock.

STMicroelectronics, headquartered in the Netherlands and headquartered in Switzerland, is a global designer, developer and manufacturer of semiconductor products. The company’s key business segments include optical and RF communications, analog products, sensors and MEMS, embedded processing, and discrete and power products. In terms of end users, the automotive, industrial and personal electronics segments are business growth drivers for the company.

For fiscal 2025, STMicroelectronics reported revenue of $11.8 billion with a gross margin of 33.9%. For the same period, the company reported free cash flow of $265 million.

While STMicroelectronics reported a decline in fiscal 2025 revenue, SMT stock has trended up 28% over the past six months, in part due to a positive long-term outlook supported by key strategic partnerships.

While declining revenue is a cause for concern, STM stock has been on an upward trend. After all, the company has multiple growth catalysts in the coming years. The partnership with AWS is a trigger for growth. Similarly, the company’s chip supply to SpaceX for Starlink is expected to double over the next two years.

STM has also indicated that revenue from silicon carbide power devices is expected to return to 2024 levels next year. This comes after a revenue contraction in 2025. Additionally, the company is targeting data center revenue of $1 billion before the end of the decade.

In another major development in December 2025, the European Investment Bank (EIB) signed a €500 million financing agreement with the company. This is the initial tranche of a €1 billion credit line aimed at boosting Europe’s competitiveness in the semiconductor sector. Under the agreement, 60% of the funds will be used for “high-volume manufacturing capabilities” within Europe, while 40% will be dedicated to research and development activities. These investments are likely to translate into growth and provide STM with an innovation advantage, especially with the emphasis on R&D.

Given ratings from 17 analysts, STM stock is a consensus “Moderate Buy.” While eight analysts assign a “Strong Buy” rating to STM, another eight have a “Hold” rating and one analyst has a bearish “Strong Sell” rating.

Based on these views, STM stock has an average price target of $33.25 currently, implying a potential 1% decline from current levels. However, the more bullish price target of $45 suggests that STM could rise as much as 34% from here.

An important point to note is that STM stock trades at an attractive forward price-to-earnings (P/E) ratio of 31 times. With analysts estimating 100% and 68% earnings growth for fiscal 2026 and fiscal 2027, respectively, the stock is likely to maintain an uptrend.

On the date of publication, Faisal Humayun Khan had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com