Siemens Energy’s Twin Engines: A $1 Billion US Bet and a €6 Billion Buyback Ahead of Make-or-Break Earnings

Siemens Energy shares rally 45% as AI data center orders fuel conventional power growth, while wind unit Gamesa targets breakeven amid a €6B buyback plan.

The mood at Siemens Energy is a study in contrasts. On one side, the conventional power business is riding a wave of demand from AI data centres that has left production capacity booked solid into 2030. On the other, the wind turbine unit Gamesa is still fighting for its operational life. The stock market, for now, has chosen to bet on the winner.

Shares closed Friday at €178.10, having surged roughly 45% since the start of the year. That leaves them within striking distance of the 52-week high of €188, a level that could be tested again when the company publishes its half-year results on 12 May.

A Billion-Dollar American Pivot

The engine room of the rally is the conventional energy division. Operators of AI data centres, hungry for reliable baseload power, are placing orders for gas turbines at a pace that has caught even the company by surprise. A quarter of new orders now come from this sector alone, and reservations are already being taken for delivery as far out as 2030.

To meet that demand, Siemens Energy is pouring $1 billion into its US manufacturing network over the next two years. The investment will expand capacity across 28 local production sites, a footprint that also serves as a hedge against the threat of US import tariffs. Nearly a third of the group’s orders originate from America, making local production a strategic necessity as well as a commercial one.

The broader order book tells the same story. In the second quarter alone, incoming orders surged to nearly €18 billion. The Grid Technologies segment is targeting operating margins of up to 20%, and a large chunk of expected full-year revenue is already locked in by firm contracts.

Buybacks Build Momentum

Management has not been content to let the operational momentum speak for itself. A share buyback programme of up to €6 billion is planned through 2028, with the first tranche already underway. In the first week of May alone, the company scooped up another 635,000 shares, bringing the total repurchased since the programme’s launch to more than 10.8 million.

Most of these shares will be cancelled, reducing the share count and boosting earnings per share for remaining holders. A smaller portion is earmarked for employee compensation schemes. The current tranche is capped at €2 billion, but the long-term ambition is clear: the company intends to return significant capital to shareholders while the core business is firing on all cylinders.

The Gamesa Question

All of this optimism, however, rests on a single hinge: Gamesa. The wind power subsidiary has been the group’s persistent headache, bleeding cash and missing targets for years. The latest quarterly figures showed some progress — the operating loss narrowed to €46 million — but the bar for the full year is much higher.

Management has promised to achieve operational breakeven at Gamesa in the current financial year, with the decisive turnaround expected in the second half. That target is the linchpin of the group’s overall guidance, which calls for revenue growth of 14% to 16% and a net profit of around €4 billion. If Gamesa stumbles, the entire forecast is at risk.

Analysts are watching closely, and their views are split. JPMorgan has a price target of €200 and a buy rating, arguing that strong margins in the grid business and early signs of recovery at Gamesa could push the stock higher. Barclays is more cautious, warning that the elevated valuation leaves the shares vulnerable to a sharp correction if the half-year numbers disappoint.

For now, the market is giving Siemens Energy the benefit of the doubt. The 12 May report will either confirm that faith or put the entire rally to the test.