Oddo BHF Lifts Infineon to Outperform as Chipmaker Trades Commodity Memory for AI Data Center Power

Oddo BHF upgraded Infineon to Outperform with an EUR 80 target, while Morgan Stanley cut to Equalweight, as the chipmaker exits NOR flash.

Infineon Technologies is drawing fresh attention from the analyst community after a stretch of pronounced share-price volatility pushed the stock's valuation back into the spotlight. On September 18, Oddo BHF upgraded the chipmaker to "Outperform," with analyst Stephane Houri pointing to the attractive valuation following the heavy losses the shares had previously absorbed. Houri also flagged upbeat prospects for 2027 as a supporting factor behind the call.

The reassessment lands as Infineon sharpens its focus on growth- and margin-rich businesses, with power supply for artificial intelligence data centers moving to the center of its operating strategy. That pivot is being underwritten in part by a retreat from commodity memory.

Winbond Deal Strips Out Roughly EUR 350 Million in Annual Revenue

Infineon has agreed to sell its NOR flash and F-RAM memory business to Taiwan's Winbond Electronics in a transaction valued at USD 1.12 billion on a debt- and cash-free basis. The deal, initiated roughly two weeks ago, remains subject to regulatory approvals and is expected to close in the second half of 2027. Around 350 employees across ten countries will transfer to Winbond, and the divestment will cost Infineon approximately EUR 350 million in annual revenue going forward.

The move marks another step in the company's long-term realignment toward strategic growth fields, pulling the chipmaker out of standardized memory technologies while concentrating resources where management sees the strongest returns.

Fourth-Quarter Targets Point to a Double-Digit Sequential Rebound

For the closing quarter of fiscal 2026, Infineon is targeting revenue of roughly EUR 4.7 billion, a 13 percent increase over the prior quarter, alongside a segment result margin of about 23 percent. On a full-year basis, the outlook remains demanding: total revenue of around EUR 16.3 billion at a segment result margin of approximately 20 percent. The AI data center segment alone is projected to contribute more than EUR 1.6 billion in revenue.

Demand for power semiconductors is climbing sharply as hyperscale operators confront the electricity-distribution demands of AI workloads. Infineon's energy-conversion solutions sit at the heart of that buildout, and the company is benefiting from multi-year capacity agreements worth a high single-digit billion-euro sum.

A Split Street: Morgan Stanley Cuts, Oddo BHF Backs the Valuation

Not everyone on the sell side shares the bullish read. On September 8, Morgan Stanley downgraded the stock from "Overweight" to "Equalweight" and cut its price target to EUR 65, citing a more skeptical stance on revenue expectations in the AI data center business. Oddo BHF moved the opposite way, raising its rating to "Outperform" with a price target of EUR 80.

In Monday's session, the shares changed hands at EUR 56.60, a modest daily decline of 1.1 percent. The stock closed Friday's trading at EUR 57.22. Despite the recent softness, Infineon has still delivered a gain of 50 to 52 percent since the start of the year, a performance that suggests investors are giving the portfolio overhaul the benefit of the doubt even as cyclical headwinds persist.