European Semiconductor Stocks Show Mixed Reactions on AI Demand and Earnings
Market Movements and Company Performances
By Nathan Vifflin and Ozan Ergenay
July 23 (Reuters) - European semiconductor stocks moved sharply on Thursday after earnings updates, with Soitec surging on strong photonics demand linked to artificial intelligence applications, while STMicroelectronics and BE Semiconductor Industries (Besi) fell as investors reacted to weaker near-term performance and elevated growth expectations.
Soitec's Surge on AI-Driven Demand
Soitec shares jumped around 23% after the French semiconductor materials supplier beat sales expectations by a wide margin and pointed to accelerating demand for photonics wafers used in artificial intelligence applications.
Revenue Growth and Photonics-SOI Business
The company guided for revenue growth of more than 30% in the second quarter and said revenue from its Photonics-SOI business was expected to more than double from slightly above $100 million in the prior year.
STMicroelectronics and Besi Face Investor Scrutiny
STMicroelectronics' Profit Miss
By contrast, STMicroelectronics fell 15% after reporting quarterly profit below expectations, with investors focused on the pace of recovery in its automotive and industrial markets.
Besi's Revenue and Growth Expectations
Shares in Dutch semiconductor equipment maker Besi also fell around 3% despite strong order bookings after second-quarter revenue came in slightly below expectations. Andrew Gardiner, head of European technology equity research at Citi, said consensus forecasts already assumed strong growth in 2026 and 2027, raising the hurdle for further upside.
Investor Sentiment and Future Revenue Questions
"You're seeing more questions being asked about where's the future revenue going to come from," said Rushabh Amin, multi-asset portfolio manager at Allspring Global Investments.
"Twelve months ago the rage was about hyperscalers and the same questions were asked. Now, the semis came into the fold."
Nokia and the Broader Semiconductor Supply Chain
AI Demand and Supply Constraints
Nokia, meanwhile, offered another indication of robust AI-related demand. The Finnish network equipment maker said demand remained strong but that supply constraints persisted in parts of the semiconductor market.
"Demand remains strong, while supply continues to be the main industry constraint, prompting our customers to place longer-term orders," CEO Justin Hotard said in a statement.
Financial Performance and Pricing Pressures
Nokia's shares were little changed despite a second-quarter profit beat. Hotard told Reuters the company was also feeling the impact of rising memory prices as AI customers competed for chip supply.
"Where we have pricing that we can't absorb through a different design, we're passing it on to customers," he said.
Alphabet's Cloud Growth and Capital Spending
Google owner Alphabet earlier this week reported record cloud growth but faced investor scrutiny over a $15 billion increase in planned 2026 capital spending.
(Reporting by Nathan Vifflin and Ozan Ergenay in Gdansk; Editing by Matt Scuffham)
