Aixtron's Valuation Defies a Deepening Operational Slump

German chip equipment maker Aixtron hits record high as investors bet on GaN tech for AI data centers, ignoring a severe downturn in its silicon carbide business and a Q1 profit warning.

The stock of German semiconductor equipment maker Aixtron is trading at record highs, a performance that appears increasingly disconnected from its immediate business reality. Shares surged over 7% to EUR 36.35, pushing its 12-month gain to nearly 295% and marking a new 52-week peak. This rally persists despite a severe downturn in a core business segment and a stark profit warning for the current quarter.

For the first quarter of 2026, management anticipates revenue of only around EUR 65 million. This figure falls a staggering 40% short of the average analyst forecast of EUR 111 million. The primary culprit is significant overcapacity in the market for silicon carbide (SiC) production equipment, which is crushing demand. This weakness follows a full-year 2025 where group revenue already contracted by 12% to EUR 556.6 million.

Investors, however, are looking past this SiC-driven slump and focusing on a different growth narrative tied to artificial intelligence. The company's management is betting on gallium nitride (GaN) technology, forecasting that optical data communication and GaN power electronics will become key revenue drivers in 2026. The most potent long-term opportunity may be power supplies for AI data centers, which Aixtron believes could evolve into the single largest application for GaN power semiconductors.

This optimism is echoed by analysts. DZ Bank's Armin Kremser expects that the planned ramp-up of Nvidia's 800-volt architecture in data centers could lead to increased orders for Aixtron's equipment as early as the second half of 2026. The company itself predicts a doubling in demand for datacom lasers this year.

To navigate current geopolitical trade tensions, Aixtron is executing a strategic pivot to Asia. It plans to invest approximately EUR 40 million across 2026 and 2027 to establish a new production facility in Penang, Malaysia. The site will handle assembly, testing, and engineering support for the Asian market, which already accounts for 60% of total group sales. Operations are scheduled to begin in early 2027, with first deliveries following in the second half of the year. The move is a direct effort to circumvent potential US special tariffs on semiconductors.

A robust balance sheet provides the company with ample runway for this transition and the current market weakness. Aixtron boasts an equity ratio of 88% and holds liquid funds of EUR 224.6 million. Its free cash flow improved dramatically in 2025, rising by over EUR 250 million to EUR 181.9 million despite the revenue decline. The company will maintain its dividend at EUR 0.15 per share, payable at the Annual General Meeting on May 13.

All eyes are now on April 30, when Aixtron will release its detailed quarterly figures. For the stock's remarkable rally to be fundamentally justified, the report must deliver concrete order intake and booking numbers from its AI-related equipment business. The market has granted substantial advance praise; the upcoming results will show whether it was warranted.