Infineon Shares: Analyst Sees AI Boom Driving Upturn, But Valuation Caps Upside

mwb Research maintained its Hold rating on Infineon Technologies (ETR: IFX) while raising its price target to €58.00 from €48.00, saying a broadening recovery across end-markets is encouraging but that the stock’s recent sharp rally leaves risk-reward looking balanced.

Analyst Abed Jarad told clients in a note that Infineon’s second-quarter results were broadly in line, with revenue of €3.812 billion rising 6% year-on-year and segment margin of 17.1% up 40 basis points year-on-year, but noted that the underlying message was “more constructive than the headline numbers.”

The Power & Sensor Systems division remained the core earnings driver, with revenue up 26% year-on-year to €1.260 billion and a margin of 20.4%, supported by AI power and radar sensors. The Green Industrial Power segment also showed a clearer recovery, with revenue up 7% year-on-year.

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Automotive was the weak spot, with revenue down 2% year-on-year as high-voltage drivetrain pressure offset strength in software-defined vehicles.

Jarad said the broader picture is improving, with management now seeing “a broader upturn across more end-markets, rather than a recovery concentrated only in AI.”

Industrial is emerging as “a second leg of the upturn,” while automotive is showing early signs of cyclical replenishment. The backlog grew by €4 billion quarter-on-quarter to approximately €25 billion, up 25% year-on-year.

AI power remains supply-constrained, with Infineon redeploying capacity from other segments to meet demand. Despite the improved outlook, mwb Research said it will “remain on the sidelines with a HOLD rating until a more attractive entry opportunity emerges,” with the current price of €61.66 sitting marginally above the new price target.