Quick Silver: Infineon (OW; TP €96) | Another example of mismanaged expectations but LT story intact?

Research evidence excerpt

Scott Silver - Specialist Sales - European TMT AC (44-20) 7134-0412

J.P. Morgan Securities plc

Europe Specialist Sales

JPMORGAN

05 August 2026

Quick Silver: Infineon (OW; TP €96) | Another example of mismanaged

expectations but LT story intact?

Scott Silver

Shares are down around 5%, with the debate shifting towards whether this was simply another case of expectations being

mismanaged by an increasingly bullish management team. The biggest frustration from both long-onlys and hedge funds

continues to centre on margins. Investors expected pricing improvements to translate into much stronger margin leverage,

particularly after management struck a notably bullish tone on the road over recent months. Several investors commented

that meetings with management in June were among the most constructive they had seen, making today’s margin

disappointment even harder to reconcile. Unfortunately, the earnings in my view did little to ease those immediate concerns

although it sounds like they are trying to bake in a level of conservatism. That said, most investors I have spoken with do not

believe today’s results fundamentally alter the longer-term investment case. Attention has quickly shifted back towards the

AI opportunity, where the company have indicated that they expect 2027 AI revenue guidance to be materially higher than

the current €2.5bn target. Ahead of results, buy-side expectations generally sat around €2.7-3.0bn, whereas “materially

higher” is now being interpreted by some as comfortably above €3bn, ahead of where consensus currently sits. Looking

further out, conversations continue to centre on €4-4.5 of EPS by 2028, with the AI business expected to generate

somewhere between €4-6bn of revenue by then, albeit with most investors clustered towards the lower end of that range.

Some investors this morning have increasingly question whether the valuation is now looking more favourable (13-15x) for a

business whose structural AI and cyclical recovery story appears largely unchanged. Only a few weeks ago, investors were

prepared to apply a mid-20s earnings multiple, implying a valuation closer to €90-100 per share. The question now is

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