The chip manufacturer Infineon is increasing its investments significantly in the current financial year in view of the boom in the artificial intelligence business.
The company announced on Wednesday in Neubiberg near Munich that this is intended to advance the expansion of manufacturing capacities for power supplies for AI data centers. A total of 2.7 billion euros in investments are now planned for 2025/26 (as of the end of September), 500 million more than initially planned. A large part of the additional funds will flow into the factory in Dresden.
“The very dynamic demand for AI in an otherwise subdued market environment is giving Infineon a strong tailwind,” explained CEO Jochen Hanebeck. The focus is currently on power supply in AI data centers, and the expansion of the network infrastructure will be added in the next few years.
Infineon expects further sales of 1.5 billion euros in this area for the current year. The forecast is purely “supply-related,” said Hanebeck in a conference call on the figures for the first quarter. The need is significantly higher. For the 2027 financial year, revenue is expected to increase significantly to 2.5 billion euros. AI offers an “unprecedented growth opportunity for Infineon,” said Hanebeck
The AI boom and the associated increasing demand for data centers should help Infineon bridge ongoing weakness in the automotive industry. The business with the Auto industry currently accounts for around half of total sales.
The group also recorded dynamic demand for AI in the first quarter, while the market environment otherwise remained difficult. Compared to the previous quarter, sales fell by seven percent to just under 3.7 billion euros. The margin for the operating business (segment result margin), which was much noticed by analysts, fell by 0.3 percentage points to 17.9 percent, but was better than the market had previously expected. Hanebeck spoke of a “successful start” to the financial year.
Infineon confirmed the annual forecast. Sales are expected to increase moderately in 2025/26. The segment result margin should be in the high tens percent range. In the previous year, Infineon had also recorded declines due to the weakness of the automotive industry. In the second quarter, the group expects a slight increase in sales to 3.8 billion euros and a margin in the mid to high single-digit ten percent range.
The forecast does not include the latest addition from Infineon. The evening before, the group announced the takeover of part of ams-OSRAM’s sensor business for 570 million euros. According to AMS Osram, the sold non-optical sensor business generated sales of around 220 million euros and adjusted earnings before interest, taxes, depreciation and amortization of around 60 million euros in the 2025 calendar year. With the planned investment, Infineon will strengthen its position in the area of sensors for automotive and industrial applications through a complementary portfolio and expand the product range of sensors for medical applications, according to Infineon.
The transaction will have a positive impact on earnings per share immediately upon completion, explained Hanebeck. In addition, management expects significant synergies in the future, with production to be partially transferred to the factory in Kulim in Malaysia over time. Until then, there is a multi-year supply agreement with AMS Osram. The transaction is to be financed with debt capital. Analyst Malte Schaumann from Warburg estimates that the takeover should be slightly accretive to value.
Jefferies leaves Infineon at ‘Buy’ – target 52 euros
The analysis house Jefferies has left the rating for Infineon at “Buy” with a price target of 52 euros. The first quarter exceeded expectations, particularly clearly in the so-called segment result margin, wrote Janardan Menon on Wednesday. The Munich-based company did not increase its targets for the AI chip business in 2026, but has now announced growth of 66 percent for the 2027 financial year. This would mean that the share of these chips in group sales would increase from 10 to 15 percent.
Barclays leaves Infineon at ‘Overweight’ – target of 44 euros
The British investment bank Barclays has left Infineon’s rating at “Overweight” with a price target of 44 euros. On Wednesday, after the report on the first quarter of 2026, analyst Simon Coles particularly positively highlighted the target for the AI chip business in 2027. The planned growth is more dynamic than expected.
Warburg Research leaves Infineon at ‘Buy’ – target of 42 euros
The analysis house Warburg Research has left the rating for Infineon at “Buy” with a price target of 42 euros. Malte Schaumann wrote on Wednesday that profitability in the first quarter of 2026 was higher than expected. The takeover of parts of ams-OSRAM’s sensor business is likely to increase value slightly.
The Infineon share initially rose on XETRA, but then slipped and ultimately lost 1.87 percent to 40.31 euros.
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