Siemens’ Italian Rail Gambit and Data Center Surge Mask a Sharp Share Correction

Siemens shares fall 5% from yearly peak as profit-taking hits, but €1bn Mermec acquisition and strong data centre orders support fundamentals. Analysts see upside to €335.

Siemens saw its stock hit a new yearly peak of €272.20 on Thursday, briefly pushing the group’s market capitalisation past €200 billion. By Friday, however, the shares had slumped nearly 5% to €259.00 as profit-taking swept through the market. The 14-day relative strength index had flashed an overbought reading of 81 – a classic technical trigger – while weak broader indices and geopolitical jitters added to the selling pressure.

Yet the pullback masks a business firing on multiple cylinders. The Munich-based industrial conglomerate confirmed plans to acquire Italian railway technology specialist Mermec in a deal valued at over €1 billion. The purchase bolsters Siemens’ rail portfolio with advanced diagnostic systems and signalling equipment, extending its reach into a sector that is benefiting from European infrastructure spending.

The acquisition is underpinned by record operational performance in the second quarter. Revenue rose 6% year-on-year to €19.8 billion, propelled by two standout divisions. Smart Infrastructure booked an all-time high order intake of €7.5 billion, a 35% jump, with data centre orders alone accounting for €1.9 billion as the AI boom fuels demand for power and cooling equipment. Digital Industries also saw a record quarter, with orders climbing to €4.8 billion.

Mobility, by contrast, faced headwinds from US tariffs, which slightly crimped revenue growth. Still, management reiterated its full-year guidance, targeting revenue growth at the upper end of its forecast range and earnings per share between €10.70 and €11.10. For the recently completed fiscal 2025, Siemens has proposed a dividend of €5.35 per share, underscoring the group’s cash-generating strength.

Analysts at UBS and JPMorgan have taken the share decline in stride, setting price targets as high as €335. Chart technicians now focus on the €250 support level – should it hold, the longer-term uptrend remains intact.

Beyond the core business, investors are keeping an eye on Siemens’ sprawling ecosystem. Listed affiliate Siemens Energy recently posted robust half-year numbers and expanded its share buyback programme. Siemens Healthineers, however, continues to struggle with weak diagnostics sales in China. Meanwhile, Swiss rival ABB is raising the competitive temperature by spinning off its robotics division to double down on electrification – a space Siemens is also targeting through share buybacks and planned carve-outs of non-core units in early fiscal 2027.

For now, a bulging order book and the strategic push into rail via Mermec provide a cushion against short-term market noise. The stock’s technical correction may test nerves, but the fundamental story – data centre demand, automation strength, and a disciplined capital allocation – remains intact.