Goldman Sachs maintains Infineon Buy rating and raises 12-month target price to €75.0

Overview

This is a Goldman Sachs company research report on Infineon, with the core view that Infineon is simultaneously benefiting from expanding AI data center power demand, industrial end-market recovery, and automotive customer replenishment. The report emphasizes that management sees improving demand in key markets, AI momentum spilling over into adjacent power and industrial applications, automotive customers' low inventories driving stronger order inflows, and order backlog rising to €25bn, up about 25% year-on-year.

Core views

The key conclusion of the report is that Goldman Sachs maintains a Buy rating on Infineon and materially raises the target price. The rationale includes: first, higher visibility in AI power semiconductor revenue, with FY26 guidance at €1.5bn and FY27 at €2.5bn; second, automotive semiconductors are still affected by xEV high-voltage power device pricing pressure, but replenishment, SDV and ADAS demand support medium- to long-term growth; third, PSS margin has improved to 20.4%, with pricing actions, tighter supply, and lower idling costs jointly supporting margin expansion; fourth, FY26-29 revenue, adjusted EBIT, and EPS forecasts are all raised.

Analysis framework

The report combines management updates, backlog, end-market inventories, AI power content per kW, automotive replenishment, and valuation multiples in its analysis. Earnings forecasts are primarily translated through higher revenue guidance, margin improvement, operating leverage, and the latest equity assumptions into adjusted EBIT and EPS; valuation uses a CY27E EV/EBITDA multiple, raising the target multiple from 12x to 16x and applying it to higher EBITA forecasts.

Methodology notes

• Valuation methodsEV/EBITDA目标倍数法

  A 12-month target price of €75.0 is derived from a 16x CY27E EV/EBITDA multiple and raised EBITA forecasts.

  The report raised the target multiple from the prior 12x to 16x while increasing earnings forecasts to reflect stronger two-year-forward EPS growth and AI power opportunities.

• Industry demand frameworkAI power content-per-kW framework

  Measures AI data center power opportunity through power-semiconductor content per kW.

  Infineon has moved its framework from an end-of-decade €8-12bn SAM to a per-kW content approach, currently around $100-$250/kW, averaging about $175/kW, with potential increases as vertical power module and solid-state transformer penetration rises.

• Factor analysisGS Factor Profile

  Compares the stock with the broader market and sector peers across four attributes: Growth, Financial Returns, Multiple, and Integrated.

  The framework uses analyst estimates and normalized rankings to assess growth, financial returns, and valuation multiples, then forms a blended percentile used to provide stock-level investment context.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Infineon (IFXGn.DE)

  The core coverage name; the report maintains a Buy rating and raises the target price.

  Strengths

  The mix of AI power, SiC, GaN, silicon-based power, analog, and system-level capabilities is relatively well-rounded; backlog is strong; automotive and industrial end-markets are gradually recovering.

  Weaknesses

  xEV high-voltage power components still face pricing pressure; some businesses remain affected by cyclical idling and input-cost headwinds.

  Comparison

  The report compares current two-year-forward EPS growth of around 40% with a historical average of around 18%, judging the growth improvement as almost 2x; it also notes the implied EV/EBITDA multiple at the target price is above historical averages.

  Risks

  End-market weakness versus expectations, lower-than-expected EV adoption, a deteriorating semiconductor cycle, and weak macro demand.

• AI power semiconductors

  A key driver of Infineon's medium- to long-term upside.

  Strengths

  Rising per-kW content, penetration of vertical power modules, initial ramp of solid-state transformers, and expansion of GaN and SiC solution adoption.

  Weaknesses

  FY27 revenue remains sensitive to customer dynamics, pricing, and supply constraints.

  Comparison

  The company has moved from an end-of-decade €8-12bn SAM framework to a $100-$250/kW content framework.

  Risks

  If AI capex pace slows, if price support weakens after supply bottlenecks ease, or if customer demand shifts.

• Automotive semiconductors

  A support pillar driven by cyclical recovery and replenishment.

  Strengths

  Low customer inventories are driving replenishment; FY27 backlog is increasing; SDV and ADAS lift semiconductor content; share gains are emerging in Chinese automotive MOSFETs.

  Weaknesses

  xEV demand is weaker than previously expected, and pricing pressure on high-voltage electric-drive power devices persists.

  Comparison

  Chinese competitive pressure is mainly concentrated in IGBTs, while local suppliers are narrowing the gap; Infineon still benefits from share gains in Chinese automotive MOSFETs.

  Risks

  EV adoption below expectations, intensifying competition, and non-persistence of auto inventory normalization.

• Industrial and data center power management

  An important source of order growth and margin expansion.

  Strengths

  U.S. customers are increasing power infrastructure investment; manufacturing PMI is above 50 in key regions; legacy server CPU power management could benefit from greater inference workload growth.

  Weaknesses

  Higher input costs in energy and precious metals could offset part of the margin expansion.

  Comparison

  The legacy server CPU power management business was previously disclosed at €500mn, and the report sees upside potential.

  Risks

  Industrial recovery weaker than expected, soft macro demand, and further input-cost increases.

Key data

• 12-month target price€75.0Previously €53.0, based on a 16x CY27E EV/EBITDA multiple.
• Current price€59.50Price disclosed in the report, as of the close on 2026-05-07.
• Order backlog€25bnUp about 25% year-on-year, and continues to increase in the current quarter.
• FY26 Group revenue outlookAbove €16bnManagement expects FY26 revenue to grow meaningfully year-on-year, with 2HCY26 stronger than 1H.
• AI power revenue guidanceFY26 €1.5bn; FY27 €2.5bnFY27 depends on customer dynamics, pricing, and supply constraints.
• AI power content$100-$250/kW, around $175/kW on averageCould rise further as higher-power module penetration and solid-state transformer ramp-up increase.
• PSS margin20.4%Up 300 bps month-on-month, indicating progress in earnings expansion.
• FY26-29 revenue forecast revisionup about 3-9%Reflects strong AI power semiconductors and industrial demand, partly offset by more cautious automotive assumptions.
• FY26-29 EPS forecast revisionup about 4-11%Impacted by higher EBIT and updated equity assumptions.
• FY26 adjusted gross margin outlooklow-to-mid 40% rangeImproved versus prior guidance.

Impact & implications

The investment implication for Infineon is constructive: expanding AI data center power demand is re-rating the company from a partial traditional automotive and industrial cyclical profile toward an AI infrastructure beneficiary. Automotive replenishment and higher SDV semiconductor content provide cyclical recovery support, while margin expansion improves earnings resilience. However, the implied valuation multiple expansion in the target price places greater demands on the persistence of AI demand, the semiconductor cycle, and automotive end-market recovery.

Risks

• End markets weaker than expected, especially EV adoption below expectations.
• A weakening semiconductor cycle, putting pressure on orders, pricing, and capacity utilization.
• Deteriorating macro environment, prolonging weak consumption demand and delaying demand release.
• Persistent xEV high-voltage power-device competition and pricing pressure.
• Higher input costs for energy and precious metals, partially offsetting margin expansion.
• If AI and adjacent-market supply tightness does not persist, pricing support may weaken.

What to watch

• Whether FY27 automotive order backlog continues to build, especially in China and Europe.
• Whether AI power revenue achieves FY26 €1.5bn and FY27 €2.5bn guidance.
• Whether power semiconductor content per kW continues to rise from the current average of about $175/kW.
• Whether PSS margin continues to improve with pricing actions and tighter supply.
• Whether idling-cost declines materialize along an annualized path of €650mn.
• Whether xEV high-voltage power-device pricing pressure eases.
• Whether SDV and ADAS design wins convert to higher automotive semiconductor revenue.
• Whether FY26 adjusted gross margin lands in the low-to-mid 40% range.