Infineon's Split Verdict: Oddo BHF Backs the AI Pivot While Morgan Stanley Trims Its Bets

Oddo BHF upgraded Infineon to Outperform with an EUR 80 target, while Morgan Stanley cut it to Equalweight and lowered its target to EUR 65.

Two of Europe's most closely watched research houses have landed on opposite sides of the Infineon trade, and the gap between them says as much about the chipmaker's unfinished transformation as it does about the stock itself.

Oddo BHF moved first, upgrading the shares from "Neutral" to "Outperform" on September 18 with a price target of EUR 80. Morgan Stanley had already gone the other way ten days earlier, cutting its rating from "Overweight" to "Equalweight" and pulling its target down to EUR 65 from EUR 81. The disagreement centers on how quickly Infineon's strategic repositioning will translate into earnings — and how much of that story is already priced in.

A Portfolio in Motion

Infineon has spent the past several weeks redrawing its business map. Roughly two weeks ago, the company agreed to sell its NOR flash and F-RAM memory operations to Taiwan's Winbond Electronics for USD 1.12 billion in cash, on a debt-free basis. The deal, which would transfer about 350 employees to the buyer, still needs regulatory clearance and is targeted to close in the second half of 2027.

At the same time, the group is pouring resources into higher-margin territory. More than a month ago it acquired C2i Semiconductors, a Bangalore-based specialist in power supply solutions for AI data centers. That purchase is expected to complete in the third quarter of 2026.

The logic behind the reshuffle is straightforward: exit commodity memory, double down on power semiconductors, and let artificial intelligence demand do the heavy lifting.

Betting on the Data Center

Hyperscale operators are straining under the power demands of AI workloads, and Infineon is positioning its energy-conversion chips as the answer. Management expects the AI data center segment to generate more than EUR 1.6 billion in revenue during 2026, backed by multi-year capacity agreements with customers whose combined volume sits in the high single-digit billions of euros.

Those commitments feed into a broader fiscal 2026 outlook that remains demanding: group revenue of roughly EUR 16.3 billion and a segment result margin of about 20%.

For the closing quarter of the fiscal year, the board has guided toward revenue of approximately EUR 4.7 billion — a 13% sequential increase — with the segment margin climbing to around 23%. Infineon will report those figures on November 10, 2026, closing the books on the full year.

Where the Analysts Part Ways

Morgan Stanley's downgrade rested on a more cautious read of AI data center revenue expectations, suggesting the bank sees execution risk in the very segment Infineon is counting on most. Oddo BHF took the opposite tack, pointing to an attractive valuation as the basis for its upgrade.

The split captures a wider debate: is Infineon's pivot a value opportunity or a bet that still needs proof?

Market Verdict So Far

Investors have largely shrugged off the cautious voices. The stock closed Friday at EUR 57.22, up 52% since the start of the year — a gain that suggests the market is willing to give the portfolio overhaul the benefit of the doubt, even as the two research houses disagree on what comes next.