Siemens Energy's Wind Unit Weighs on a Record-Setting Rally

Siemens Energy shares hit record highs on strong gas & grid profits and AI data center demand, but persistent losses at Siemens Gamesa fuel spin-off talks.

Siemens Energy shares have been the standout performer in Germany's DAX, soaring 176 percent over the past year. Yet this relentless rally, which pushed the stock to an all-time high of €170.86 this week, is facing a critical test. The company's wind power division remains a persistent drag, fueling speculation of a potential spin-off just as the broader business hits new records.

The core operations are firing on all cylinders. In the first quarter of 2026, net profit tripled to €746 million, driven by robust performance in Gas Services and Grid Technologies. New orders surged 33 percent to €17.6 billion, revenue grew 12.8 percent to €9.7 billion, and the order backlog reached a historic €146 billion. A key tailwind is the insatiable power demand from artificial intelligence data centers, for which Siemens Energy's gas turbines are increasingly seen as a crucial solution.

Management is actively supporting the share price. A massive buyback program has removed approximately 8.4 million shares from the market since early March, including over one million shares acquired between April 7 and 12 at average prices up to €167.45. This strategic reduction in free float provides a tangible buffer against market volatility.

However, the shadow over this success story is Siemens Gamesa. The wind subsidiary, while improving, continues to report losses. It posted an operating loss of €1.36 billion for the full 2025 fiscal year, which narrowed to €46 million in Q1 2026. Siemens Energy maintains its official guidance that the unit will reach break-even for the full current fiscal year, but acknowledges the first half will remain in the red. Progress is attributed to better productivity in offshore wind and higher service profitability in onshore.

The slow pace of this turnaround is frustrating some investors. Activist shareholder Ananym Capital demanded a spin-off of the wind business as early as December 2025, arguing it suppresses the valuation of the thriving core operations. Should Gamesa miss its break-even target this year, pressure for a separation is expected to intensify significantly.

The shareholder base is also undergoing a structural shift. Siemens AG, the former parent, has reduced its stake from 14.96% to 5.54% in a €3.8 billion transaction. Market observers view this as the final major step in a separation that began with the 2020 IPO, significantly increasing free float and expected trading liquidity.

Analyst opinions reflect the bifurcated outlook. J.P. Morgan recently raised its price target from €160 to €200, praising margin development, while Deutsche Bank sees a €180 target. More conservative Barclays and Bernstein Research have targets around €150, illustrating the wide disparity in how the market prices the Gamesa risk. CFO Maria Ferraro provided some reassurance, estimating tariff-related costs for 2026 will be in the low triple-digit million-euro range, below the prior year's roughly €200 million, thanks to a network of 28 production sites in the U.S.

For the full year, Siemens Energy forecasts revenue growth of 11-13%, a profit margin of 9-11%, and net income between €3 and €4 billion. All eyes are now on the upcoming Q2 report due May 12. The figures will reveal how close Gamesa truly is to profitability and determine whether the rally can continue unabated or if calls for a corporate split will gain decisive momentum.