Please ensure Javascript is enabled for purposes of website accessibility

How STMicroelectronics Shares Nearly Doubled in 2017

By Anders Bylund – Jan 11, 2018 at 11:03AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The chipmaker is chasing down several exciting growth markets, including one huge new contract from Cupertino.

What happened

Shares of STMicroelectronics (STM 3.22%) nearly doubled in 2017, rising 92.4%, according to data from S&P Global Market Intelligence. The semiconductor designer can thank Apple (AAPL 0.70%) for most of that surge.

So what

Early last year, rumors started spreading about Apple including a new facial-recognition system in the then-upcoming iPhone X smartphone. The purported solution would require chips from STMicro, nearly doubling the company's revenue uptake per iPhone sold. With every titillating headline, STMicro's stock price edged just a little bit higher.

When Apple finally presented its latest and greatest flagship phone, the iPhone X indeed sported a facial-recognition system to make it easier to unlock your phone. STMicro was a key supplier of the necessary chips, and that sale boosted the chipmaker's third-quarter results by a lot. If analyst musings on this topic were in the right ballpark, the facial-recognition tools in iPhone X could lift STMicro's top-line sales nearly 10% higher over the smartphone's first year on the market.

Technician using tweezers to hold up a semiconductor chip.

Image source: Getty Images.

Now what

The iPhone X is not STMicro's whole story, of course. The company is also landing deals in important growth markets such as automotive computing and smart-home controllers. Simply put, STMicroelectronics finds itself at the crossroads of several exciting growth markets, and its surging share prices should come as no surprise.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.