Infineon Raises 2026 Outlook as AI Data Center Chip Demand Surges

Infineon Technologies (ETR: IFXGn) raised its fiscal 2026 revenue growth forecast on Wednesday, citing booming demand for AI data center power chips despite continued weakness in the electric vehicle semiconductor market. The German chipmaker now expects “significant” revenue growth for fiscal 2026, upgrading its earlier forecast of “moderate” growth.

The company reported second-quarter revenue of €3.81 billion, largely matching analyst expectations of €3.82 billion. Infineon also improved its full-year profitability outlook, raising its segment result margin guidance to around 20%, up from the previously projected “high-teens” range. Adjusted gross margin guidance was lifted to the “low-to-mid forties,” while adjusted free cash flow guidance increased to approximately €1.65 billion.

Strong momentum in artificial intelligence infrastructure played a major role in the upgraded forecast. Infineon’s Green Industrial Power division delivered standout results, generating €403 million in revenue, beating analyst expectations of €365 million. The segment also posted an 11.7% margin, supported by rising demand for AI data center power supply solutions.

CEO Jochen Hanebeck said the AI boom is accelerating and demand for Infineon’s power management technologies remains extremely strong. He added that the company expects broader growth across multiple end markets during the second half of the fiscal year.

However, the Automotive division continued to struggle due to declining demand for electric vehicle components, particularly high-voltage insulated-gate bipolar transistors (IGBTs). Automotive margin came in at 18.1%, below the 20.3% analysts expected, impacted by restructuring expenses and weaker EV demand.

For the third quarter, Infineon forecasts revenue of roughly €4.10 billion, exceeding market expectations of €4.03 billion. The company also reaffirmed its AI power revenue target of €1.5 billion for fiscal 2026 and €2.5 billion for fiscal 2027.

Beginning July 1, 2026, Infineon will restructure its operations into three business units — Automotive, Power Systems, and Edge Systems — to improve efficiency and accelerate decision-making. Analysts at Jefferies maintained a “buy” rating on the stock, saying growth momentum in AI, industrial, and automotive markets is expected to continue building.