Siemens Energy's Wind Unit Dilemma Tests Investor Patience Amid Record Profits

Siemens Energy's Q1 profit triples to €746M with a record €146B backlog, driven by AI data centers. Activist investor pressures firm to spin off its struggling Siemens Gamesa wind division.

Siemens Energy's first-quarter earnings report delivered a powerful one-two punch of soaring profits and a record order backlog, yet the stock's momentum has stalled. The reason lies in a persistent debate over the future of its troubled wind turbine division, Siemens Gamesa, which is pitting management against a prominent activist investor.

The company's core operations are firing on all cylinders. Net profit for the quarter surged to €746 million, nearly triple the prior-year figure. New orders jumped 33% to €17.6 billion, pushing the total order backlog to a historic €146 billion. Demand is so robust that gas turbine manufacturing capacity is fully booked through 2028, with initial orders already placed for 2030. A significant driver is the AI data center boom, which now accounts for a quarter of all gas turbine orders.

For the full fiscal year, management forecasts comparable revenue growth of 11% to 13% and a net profit between €3 billion and €4 billion. The company has also mitigated potential U.S. tariff damage, limiting the financial impact to the low triple-digit million-euro range, supported by its 28 production sites stateside.

However, the shadow over these stellar results is the ongoing restructuring at Siemens Gamesa. While its quarterly loss narrowed dramatically from €374 million to €46 million, the wind unit is not expected to reach breakeven until the second half of the 2026 fiscal year. This timeline is too slow for U.S. hedge fund Ananym Capital, which is publicly pressuring the board to spin off or sell the division.

Ananym co-founder Charlie Penner argues in a letter to the company that a separation would unlock significantly more value than the current turnaround plan, suggesting a potential 40% upside for the share price. The investor also points to structural burdens, including a €9 billion bank facility that replaced an earlier state guarantee and continues to weigh on the balance sheet.

The company is deploying capital to signal confidence. A substantial share buyback program is underway, with €6 billion authorized through 2028. In the first tranche between early March and April 6, Siemens Energy repurchased approximately 7.3 million of its own shares. Combined with dividends, the firm aims to return around €10 billion to shareholders over the next two years.

This confidence is echoed by some major investors. Asset manager BlackRock increased its total voting rights stake to 7.83% as of April 7. Analyst sentiment remains mixed but generally supportive. The average price target among 25 analysts sits at €165.68, close to the current trading level of €166.82. JPMorgan stands as the most bullish, maintaining an "Overweight" rating and a €200 price target, citing enduring structural demand for energy security and efficiency.

Yet risks persist beyond the wind business. Geopolitical exposure is notable, with 35% of the gas turbine order volume linked to the Middle East. While JPMorgan assesses the conflict's impact on the profit and loss statement as limited, it remains an unquantifiable overhang.

All eyes are now on the second-quarter report due May 12. Investors will scrutinize concrete progress at Siemens Gamesa and free cash flow development. If management fails to meet its own rehabilitation targets by the crucial May 2026 earnings date, Ananym's call for a spin-off could gain substantial traction among major shareholders, setting the stage for a strategic showdown.