No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Shares in STMicroelectronics leapt on Monday after the Switzerland-based chip giant announced a new multi-year, multi-billion-dollar contract with Amazon in a deal that will give the latter's cloud division the option to buy a stake of up to 2.7%.
Under the deal, the European semiconductor contract manufacturing group will supply a range of chip solutions for Amazon Web Services' data centres, which it says will help AWS address the rising demand for compute performance, efficiency and data throughput required for growing AI and cloud workloads.
As part of the deal, AWS will acquire up to 24.8m shares in ST through warrants that will vest in tranches over a seven-year period.
The agreement set an initial exercise price of $28.38 per US-listed ST share, slightly lower than Friday's closing price of $29.83 but in line with the stock's level for most of January.
"This strategic engagement establishes ST as an important supplier to AWS and validates the strength of our innovation, proprietary technology portfolio, and proven manufacturing-at-scale capabilities," said ST president and chief executive Jean-Marc Chery.
"Our advanced semiconductor solutions will directly power AWS's next-generation infrastructure, enabling their customers to push the boundaries of AI, high-performance computing, and digital connectivity."
STMicroelectronics' stock on Wall Street was trading 8.9% higher at $32.52 by 1636 GMT, while Amazon slipped 0.2% to $209.87 GMT.
The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.