Analyst Stays Bearish On Siemens Energy as AI Hopes Stretch Valuation

mwb Research reiterated a sell rating on Siemens Energy (ETR: ENR) in a note, saying that while momentum remains strong, the shares embed overly demanding long-term expectations.

Analyst Leon Mühlenbruch kept a €100 price target on the stock, implying over 29% downside from current levels, following the firm’s Future of Energy Conference, at which the German group highlighted continued strength across its Gas Services and Grid Technologies divisions.

He said structural demand is being driven by electrification, data centers, renewable integration and the replacement of ageing grid infrastructure, with a €162 billion order backlog providing strong visibility.

The analyst added that planned divestment of large parts of its Transformation of Industry unit should further sharpen the portfolio around power generation and transmission.

While Mühlenbruch remains optimistic on short- to medium-term estimates given the backlog, his concerns center on the longer-term expectations priced into the stock, which he said increasingly assume today’s exceptionally strong demand can continue indefinitely.

“Even the strongest investment cycles eventually normalize,” he wrote.

Much of the current enthusiasm is said to be tied to the rapid expansion of AI and data centers, with Mühlenbruch warning that a slowdown in AI-related investment or a broader correction in the theme could weigh on sentiment and soften expectations for future electricity and grid demand.

With the stock trading at about 25 times 2027 earnings, Mühlenbruch said even modest setbacks in pricing, order momentum or electrification spending could hit the shares disproportionately.

He believes the recent pullback helps but does not fundamentally improve the risk-reward, keeping what mwb called a “valuation-driven” sell rating.