(Bloomberg) — Infineon Technologies AG forecast revenue will return to growth in the 2026 fiscal year as the global boom in artificial intelligence data centers raised its sales outlook.
The German chipmaker sees “moderate revenue growth” in the fiscal year that ends in September and increased its projected sales of power solutions for AI data centers to around €1.5 billion ($1.7 billion), it said in a statement on Wednesday.
Demand for AI data centers is helping Infineon weather weak growth prospects in its automotive market, which represents about half of sales. The forecast for the AI business marks an increase of about 50% from its guidance last quarter, when Chief Executive Officer Jochen Hanebeck said revenues from this segment will rise to €1 billion in 2026 from €600 million in the 2025 fiscal year.
“Global investment in AI infrastructure is continuing to rise rapidly and we expect considerable growth,” Hanebeck said in the statement. “Growth momentum in the automotive, industrial and consumer markets remains modest. Many customers are proceeding cautiously and placing short-term orders.”
Infineon’s 2026 outlook offers a snapshot into the car industry’s health. Auto chipmakers have been mired in a prolonged demand slump as their customers worked through stockpiles amassed after shortages during the Covid-19 pandemic. Heightened geopolitical tensions, fueled by US President Donald Trump’s trade war and potential export tariffs on semiconductors, further roiled the market.
Infineon’s 2025 revenue slipped 2% to €14.66 billion, according to the statement. That was in line with the average of analysts estimates compiled by Bloomberg. Sales in the fourth quarter were €3.94 billion, up 6% from the previous period, with all segments, including automotive, contributing to the increase.
Gross margin in the fourth quarter was 38.1%, down from 40.9% in the prior period, due to currency effects and because some products for consumer applications in the power and sensor systems division were sold for tighter margins because of underutilized production capacity.
Revenue in the first fiscal quarter is forecast at about €3.6 billion, missing the average analyst estimate of €3.75 billion.
Infineon’s management has a history of offering cautious guidance to manage expectations, according to JPMorgan analysts including Sandeep Deshpande. “Our own opinion is that lower guidance (though it may be negative on the day of the report) would be better for the stock price on a 1-year view,” they wrote in a note before the results.
In October, Infineon competitors Texas Instruments Inc. and STMicroelectronics NV posted third-quarter results that disappointed investors, signaling that the anticipated recovery in auto demand might be faltering.
Fallout from the Netherlands’ seizure of Chinese-owned chipmaker Nexperia in late September has further disrupted the car industry. The Dutch company’s chips play a critical role in the automotive supply chain and Beijing’s move to restrict exports of Nexperia products caused a supply crunch. The sides have since moved to resolve the conflict, Bloomberg reported previously.
Infineon offers alternatives to some chips in Nexperia’s portfolio.
Some instability caused by tariffs and geopolitical issues “will be the new normal,” Chief Financial Officer Sven Schneider said on Bloomberg TV. But as more trade agreements are reached, supply chains will become more stable, he said.