Infineon's AI Power Push Meets a Divided Street

Morgan Stanley cut Infineon to Equalweight with a EUR 65 target, while Berenberg and Bernstein see up to EUR 102 after record Q3 revenue.

Infineon Technologies spent the past week doing what it does best: announcing things. A new family of dual-phase smart power stages for AI accelerators, an expanded partnership with SolarEdge on solid-state protection for 800-volt DC architectures used in hyperscale data centers, a letter of intent with Estonia's Skeleton Technologies, a smartwatch integration for its SECORA wallet technology, and HiRel power chips flying aboard NASA's Nancy Grace Roman Space Telescope mission. The Munich chipmaker is clearly building out its data-center power franchise on multiple fronts at once.

Wall Street, however, cannot agree on what any of it is worth.

Morgan Stanley's caution versus a wall of bullish calls

The split crystallized around Morgan Stanley, which downgraded Infineon from "Overweight" to "Equalweight" and cut its price target sharply from EUR 81 to EUR 65. The bank's concern is specific: it doubts that the AI data-center business will grow fast enough to justify the stock's gains this year. Morgan Stanley's revenue estimates for the Power & Sensor Systems segment for fiscal 2027 and 2028 sit 18% and 24% below consensus, at EUR 6.5 billion and EUR 7.9 billion respectively.

The market's response was swift. Shares fell 3.85% on the Tuesday following the call.

Not everyone shares that view. Warburg Research upgraded the stock from "Hold" to "Buy" and kept its EUR 84 target. Deutsche Bank Research maintained its "Buy" rating with an EUR 85 target. Berenberg weighed in with a buy recommendation and an EUR 100 target — the most optimistic figure in the current analyst field. Bernstein Research held firm on "Outperform" with a EUR 102 target, the highest on the Street.

The gap between EUR 65 and EUR 102 tells its own story about how differently the houses are reading Infineon's AI exposure. Where Morgan Stanley sees a potential slowdown in the power segment, Warburg, Deutsche Bank, Berenberg and Bernstein are betting on the company's structural position in power semiconductors.

Record numbers underpin the bull case

The fundamentals, so far, side with the optimists. Infineon posted record revenue of EUR 4.17 billion in its third fiscal quarter, up 12.6% year over year. For the fourth quarter, management is targeting further growth of 13% to EUR 4.7 billion.

Capacity expansion is running in parallel. In early July, the company opened its new smart power fab in Dresden several months ahead of schedule — at EUR 5 billion, the largest single investment in its corporate history. The facility doubles manufacturing capacity at the site and, according to the company, will become the world's largest fab for smart power semiconductors and analog/mixed-signal technologies. It will produce chips for electric mobility, energy supply and AI infrastructure.

Infineon also acquired C2i Semiconductors in late August to strengthen its power-management capabilities for AI data centers. The Skeleton Technologies letter of intent, signed in early September, targets architectures spanning the entire power supply chain for AI data centers, including solid-state transformers and gallium nitride-based systems that combine Infineon's power semiconductors with Skeleton's supercapacitor technology. On September 7, the company unveiled the TDA235E5 and TDA235E0, a new dual-phase smart power stage family designed specifically for AI accelerators and vertical power-delivery modules.

Buyback wrapped, Goldman trims its stake

Infineon completed its share buyback program at the end of August, repurchasing 3 million shares at an average price of EUR 58.45 for a total of roughly EUR 175.3 million.

Goldman Sachs, meanwhile, filed a regulatory notice that it had reduced its voting stake in Infineon to 4.31% from 5.31%, with the reporting deadline triggered in early September.

A volatile tape with a strong Friday finish

Trading has been choppy. The stock rose 4.5% on Friday to close at EUR 58.06, a first sign of stabilization after the downgrade earlier in the week, though it had lost nearly 7.9% over the preceding 30 days. The shares remain about 35% below their 52-week high of EUR 89.67, reached in early June, while sitting 85% above the November low.

The longer view is brighter: a gain of 81% over the past twelve months and 54% since the start of the year. That suggests the recent consolidation follows a strong rally rather than a fundamental loss of confidence.

Whether the operational momentum — record revenue, the Dresden fab, the string of data-center partnerships — can outweigh Morgan Stanley's growth doubts will likely be settled in the coming quarters by one metric: AI-related revenue in the power segment.