Germany’s Infineon Technologies AG is raising its growth forecast for semiconductors used in AI data centers while maintaining a cautious outlook for the automotive and industrial markets. The semiconductor giant reported strong revenue growth in AI-focused products but highlighted potential challenges in other sectors due to modest demand and inventory management concerns.

Infineon Boosts AI Data Center Chip Revenue Forecast

Infineon raised its AI data center semiconductor revenue target by 50%, from the previous forecast, reaching 1.5 billion euros ($1.75 billion) for the 2026 fiscal year, which began on October 1. The move comes after sales of these chips nearly tripled year-on-year to more than 700 million euros, demonstrating the surging demand for AI infrastructure components.

CEO Jochen Hanebeck emphasized the long-term growth potential of AI, stating, “Global investment in AI infrastructure is continuing to rise rapidly. By the end of the decade, Infineon’s addressable market will reach 8 billion euros to 12 billion.” This outlook underscores the company’s strong position in the expanding market for AI data center semiconductors, positioning it as a major player in the global AI hardware ecosystem.

Cautious Outlook for Automotive and Industrial Markets

While Infineon is upbeat on AI-related chips, the company maintains a more cautious stance on the automotive and industrial sectors. Hanebeck noted that growth momentum in these areas is modest, and there is a risk that firms may reduce inventories to unsustainable levels by the end of 2025.

“Many customers are proceeding cautiously and placing short-term orders,” Hanebeck said, highlighting that supply chain and market uncertainties are prompting careful purchasing behavior. For the current quarter, Infineon expects a 9% quarter-on-quarter decline in sales to 3.6 billion euros, reflecting these cautious trends.

Overall Revenue and Market Expectations

Despite currency headwinds and sector-specific challenges, Infineon anticipates moderate growth in total revenue for the 2026 fiscal year, building on 2025’s total revenue of 14.7 billion euros. This growth is largely supported by the booming demand for AI data center chips, which offsets slower performance in automotive and industrial segments.

Investors responded positively to Infineon’s updated guidance, with shares rising 4.5% at 09:26 GMT. Analysts from JP Morgan described the guidance as “vague, but not negative,” reflecting cautious optimism in the market.

Infineon’s Strategic Position in the Semiconductor Industry

As AI continues to reshape global technology infrastructure, companies like Infineon are increasingly focusing on high-demand sectors such as data center chips, while managing exposure to cyclical markets like automotive and industrial electronics. The company’s dual strategy of capitalizing on AI growth and carefully navigating other sectors demonstrates a measured approach in a volatile semiconductor landscape.

With global AI investment continuing to accelerate, Infineon’s leadership in high-performance semiconductors positions it to benefit from the long-term expansion of AI infrastructure while mitigating risks associated with more traditional markets.